this is about production system. Topic is inventory managment under uncertainty. BOTT-UTE Inc. sells...
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this is about production system. Topic is inventory managment under uncertainty.
BOTT-UTE Inc. sells an awesome product. Their supplier requires 6 weeks for delivery. The product costs 4TL per unit. Fixed costs of ordering is 75TL and holding one unit for a year costs 0.8 TL per unit. The weekly demand for the product is normal with mean 90 and standard deviation of 20 (units). There are 52 weeks in a year. a) Find the order quantity and reorder point if a type-1 service level of %90 is used. b) What is the imputed shortage cost in part a)? c) When should they reorder if a type-2 service level of 99% is used? Assume EOQ lot size is used. d) What is the type-1 service level in part c)? e) Assume the loss of customer goodwill (for not being able to sell the product when the customer requests) is equal to 10 TL and that all excess demand is back-ordered. Find the order quantity and reorder point for this product
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