Can someone please help me with c,d and e ?? Thank you Style 7 marks: 1,1,2, 1,
ID: 348854 • Letter: C
Question
Can someone please help me with c,d and e ?? Thank you
Style 7 marks: 1,1,2, 1, 2) 2. Reconsider item #14-46-506: four foot supersaver fluorescent light bulbs used in Sterling Pulp Chemicals (ERCO) in Saskatoon. For inventory control, Sterling uses the EOQ-ROP model. Every day, the computer system identifies those stocks that have reached their minimum (ROP) level, and the inventory staff orders those items. Recall from problem 3 of HWI that the forecast for November of item #1446-506 using Exponential Smoothing with a-.3 was 27.48 units. The purchase lead-time from the supplier, EECOL Electric, is 7 days, and the unit price is $1.50. Holding cost rate for Sterling is 24% of unit cost per year, and ordering cost for a purchase order is $5. Assume 30 days in a month. Calculate the EOQ for this item. (Hint D = forecast for November 12 a Use Excel to determine the standard deviation of monthly demand from the 10 months of actual data in HW1. b. Forccast Month No. tsedAlpha 10 aoi 0.0n 640 .D6 ad.os Calculate the reorder point using 96% 14ad-time service level. 3E 20.68 d. Suppose that the fixed order interval of 2 months is used to DAK order these bulbs. Calculate the order up-to level (Imx) using 95% service level. Suppose the manufacturer of the light bulb uses a shared production line to make the bulbs. The production speed for this bulb is 600 units per hour and demand rate is 100 units per hour Annual dem and for this bulb is 200 000 units, holding cost rate is 12% per year, unit cost is s0.70, and change-over/setup cost is $200. Calculate the economic production quantity for this bulb. e.Explanation / Answer
(c)
At 96% service level, Z = NORMSINV(0.96) = 1.75 where Z ~ Normal(0,1)
Standard deviation () of demand from the given demand data = STDEV.S(Demand) = 18.84 per month
L = average lead time = 7 days = 7/30 month
Safety Stock = Z..L = 1.75*18.84*SQRT(7/30) = 15.93
Average lead time demand = 27.48*(7/30) = 6.41
So, Reorder point = Average lead time demand + Safety Stock = 15.93 + 6.41 = 22.34 (or, 23 units)
(d)
P = review period = 2 months
L = 7/30 month
At 95% service level, Z = NORMSINV(0.95) = 1.64 where Z ~ Normal(0,1)
Safety Stock = Z..(P+L) = 1.64*18.84*SQRT(2 + 7/30) = 46.17
Average (lead time+review period) demand = 27.48*(2+7/30) = 61.37
So, order up to level = 61.37 + 46.17 = 107.54 units
(e)
p = rate of production = 600 per hour
d = rate of demand = 100 per hour
D = annual demand = 200,000 units
H = holding coost per unit per annum = 12% x $0.70 = $0.084
S = setup cost = $200
Economic production quantity (Qp*) = SQRT(2.D.S/H) x SQRT(p / (p - d))
or, Qp* = SQRT(2*200000*200/0.084) x SQRT(600 / (600 - 100)) = 33,806