4. KraftyCity is a large retailer that sells power tools and other hardware supplies. One of its products is the KraftyMan workbench. Information on the workbench is as follows: Annual demand = 1,200 Holding cost Ordering cost = = $15 per year $200 per order
4. KraftyCity is a large retailer that sells power tools and other hardware supplies. One of its products is the KraftyMan workbench. Information on the workbench is as follows: Annual demand = 1,200 Holding cost Ordering cost = = $15 per year $200 per order
College Algebra (MindTap Course List)
12th Edition
ISBN:9781305652231
Author:R. David Gustafson, Jeff Hughes
Publisher:R. David Gustafson, Jeff Hughes
Chapter6: Linear Systems
Section6.8: Linear Programming
Problem 5SC: If during the following year it is predicted that each comedy skit will generate 30 thousand and...
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![4. KraftyCity is a large retailer that sells power tools and other hardware supplies. One of its
products is the KraftyMan workbench. Information on the workbench is as follows:
1,200
$15 per year
=
: $200 per order
Annual demand =
Holding cost
Ordering cost
=
a. (*) What is the economic order quantity for the workbench?
b. (**) Suppose that KraftyCity has to pay $50 per workbench for orders under
200 but only $42 per workbench for orders of 201 or more. Using the
information provided in problem 30-40, what order quantity should
KraftyCity use?
c. (*) The lead time for KraftyCity workbenches is 3 weeks, with a standard
deviation of 1.2 weeks, and the average weekly demand is 24, with a standard
deviation of 8 workbenches. What should the reorder point be if KraftyCity
wants to provide a 95% service level?
d. (**) Now suppose the supplier of workbenches guarantees KraftyCity that the
lead time will be a constant 3 weeks, with no variability (i.e., standard
deviation of lead time = 0). Recalculate the reorder point, using the demand
and service level information in problem 3-6. Is the reorder point higher or
lower? Explain why.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F054d0b4a-edca-48ba-9ebe-36c23e945d13%2Fa659504e-5fe5-4bd7-a3c4-03517caa0768%2Frv16nnn_processed.png&w=3840&q=75)
Transcribed Image Text:4. KraftyCity is a large retailer that sells power tools and other hardware supplies. One of its
products is the KraftyMan workbench. Information on the workbench is as follows:
1,200
$15 per year
=
: $200 per order
Annual demand =
Holding cost
Ordering cost
=
a. (*) What is the economic order quantity for the workbench?
b. (**) Suppose that KraftyCity has to pay $50 per workbench for orders under
200 but only $42 per workbench for orders of 201 or more. Using the
information provided in problem 30-40, what order quantity should
KraftyCity use?
c. (*) The lead time for KraftyCity workbenches is 3 weeks, with a standard
deviation of 1.2 weeks, and the average weekly demand is 24, with a standard
deviation of 8 workbenches. What should the reorder point be if KraftyCity
wants to provide a 95% service level?
d. (**) Now suppose the supplier of workbenches guarantees KraftyCity that the
lead time will be a constant 3 weeks, with no variability (i.e., standard
deviation of lead time = 0). Recalculate the reorder point, using the demand
and service level information in problem 3-6. Is the reorder point higher or
lower? Explain why.
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