1. The injection molding department of Alvec Inc. uses 40 pounds powder X a day. The plant operates 250 days per year. The daily usage of powder X is normally distributed with a standard deviation of 5 pounds per day. The lead time to obtain powder X from a supplier in 9 days. The annual holding cost is $2.00 per unit and the cost of ordering powder X is $50.
a) What is Economic Order Quantity?
2. Refer to problem 1 and its solution. The injection molding department of Alvec Inc. uses 40 pounds powder X a day. The plant operates 250 days per year. The daily usage of powder X is normally distributed with a standard deviation of 5 pounds per day. The lead time to obtain powder X from a supplier in 9 days. The annual holding cost is $2.00 per unit and the cost of ordering powder X is $50.
a) If a company has a service level goal is 99.4%. What is the expected pounds of shortage order cycle? (shortages are measured in terms of numbers of units)
b) Determine the order points for a service level of 99.4%.