1. Business
  2. Operations Management
  3. please show all work also please answer this i know...

Question: please show all work also please answer this i know...

Question details

2. Wilborns pool supply store uses a (Q, R) inventory system to control their stock levels. Historical data shows that a popular type of pool Chlorine has a monthly demand that is approximately Normal with a mean of 35 and standard deviation of 10. The lead time for replenishment takes about 8 weeks. Each bucket of Chlorine costs the store $70. Back-orders are allowed, but cost the store $80 in fees and loss-of-goodwill. The fixed cost of replenishing is S30/order, and holding costs are based on a 20% annual rate of interest. (assume 52 weeks a year (a) Determine the optimal lot sizes and reorder points for this type of Chlorine (b) What is the optimal safety stock? Hannah, the owner of Wilborns pool supply store, attended a production seminar and has decided that her estimated cost of stock-outs, S80, may not be as accurate as she hoped. She has decided to switch to a service level model instead. She decides to set her lot size using the EOQ formula and determines the reorder point so that there are no stock-outs in 95% of the order cycles (c) What are the resulting (Q, R) values!? (d) Although she wanted a 95% fill rate, what percent of demand did she actually meet using the policy in part (a)?

please show all work!!!!


Solution by an expert tutor
Blurred Solution
This question has been solved
Subscribe to see this solution