You are the store manager for a Bomberland store. One of your products is a study desk. This desk comes in two colors: maple and cherry. Weekly demand for each desk color follows a Normal distribution with mean 100 and standard deviation 50. The demands for the two colors are independent. You order inventory replenishments weekly, the lead-time from your supplier is 3 weeks and your supplier is quite reliable, i.e., you always receive your entire order in three weeks. You use the order up-to model to decide your order quantities.
1. Suppose your order up-to level S is 400 for maple. After receiving your weekly delivery from your supplier at the beginning of a week, you note that you have 250 units of the maple desk on-hand, 100 maple desks still on-order and no maple desks backordered. How many maple desks will you order this week?
a. 0
b. 50
c. 100
d. 150
e. 200
2. Suppose your order up-to level is 500 for maple desks. With a 3-week lead time, what is your expected ending inventory of maple desks? Choose the closest number.
a. 98
b. 108
c. 208
d. 308
e. 408
3. If the order-up-to level for maple is S = 500, what is the approximate fill rate?
a. 92.00%
b. 95.00%
c. 98.75%
d. 99.56%
e. 100.00%
4. Suppose the ordering cost for maple desk is $100 and the unit holding cost is $5 per day. If there are 5 working days each week, the length of the review period using the economic order quantity model is (Hint: use the economic order quantity in Chapter 7 to figure out the length of a review period. The review period is the average flow time of one order cycle.)
a. Less than 1 day
b. Between 1 day and 2 days
c. At least a week
d. Two weeks or longer