Describe what is the chocolate raw material safety stock, Operation Management

Assignment Help:

Christian runs a small chocolate shop. He manages his chocolate raw material using a periodic review system. Daily demand has a mean of 100 pounds and standard deviation of 10 pounds. The annual holding cost is $10 per pound. He maintains 98% service level (so z = 2). The lead-time to get more chocolate is 10 days and he reviews his raw material inventory monthly(assume 30 days per month).

a. What is the chocolate raw material safety stock Christian needs to hold? What is the expected inventory level for the chocolate raw material?

b. A management consultant has told Christian that, by installing an IT system, the review period could be cut from one month to one week. How much would Christian be willing to pay for this IT system? (Hint: to simplify the problem, you can assume that the price Christian wants to pay is the saving he can achieve from using this IT system for a year.)


Related Discussions:- Describe what is the chocolate raw material safety stock

Gaining Trust with Culture Disparties, Ask quFor this assignment, you will ...

Ask quFor this assignment, you will apply critical thinking to what you have learned up to this point in this course regarding the successes and failures of the U.S. health care sy

Describe how trade lowers the costs of making computer parts, closing case:...

closing case: Logitech Best known as one of the world's largest producers of computer mice, Logitech is in many ways the epitome of the modern global corporation. Founded in 198

Define what can we learned about business and ethics, Details what can we l...

Details what can we learned about business, ethics, and society.

State the term capacity, State the term capacity. Capacity: It is...

State the term capacity. Capacity: It is the capability of an operation to do and produce. The maximum restriction to the volume of product or service an organisation can

Explain the four-step framework, Describe the four-step framework for one-t...

Describe the four-step framework for one-to-one marketing that can be adapted to CRM marketing?

OPERATTION MANAGEMENT, DISCUSS THE ADVISABILITY OF USING MODULAR ASSEMBLIES...

DISCUSS THE ADVISABILITY OF USING MODULAR ASSEMBLIES IN MANFACTURING

Explain the process of outsourcing, Outsourcing The process of outsourci...

Outsourcing The process of outsourcing the creation of a product or a service is a controversial, yet critical strategic decision for many employers. Describe one example from y

Explain first-line supervisor understand the organization, Why should a fir...

Why should a first-line supervisor understand the organization's objectives?

Describe maintain service quality in the expanded markets, Evaluate whether...

Evaluate whether or not Shangri La Hotel's heavy investment in employee development yields a profitable return to the company. Evaluate Shangri La Hotel at maintain service quality

Routing procedure, Routing Procedure For a new product or part the rout...

Routing Procedure For a new product or part the routing procedure consists of seven principle steps: 1.The first step is to analyze the product or articles and fabricate int

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd