543: discussion Questions: 2, 8;

2) Distinguish between in-process inventory, security stock inventory, and seasonal inventory.

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In-process inventory: In the life cycle products may be in the manufacturing during its beforehand stages. Companies do keep a monitor of these assets as that inventory referred to as in-process inventory.

Safety-stock inventory: in the customer market, there is a need for a product. The company has to make sure that they save a particular amount of inventory that will respond to the customer demand no matter what is the condition of the product in production cycle. This is called safety share inventory.

Seasonal Inventory: During various festivals and also seasons, a demand for a particular product might suddenly increase. Seasonal list is kept to exchange mail to such demands.

8) Which form of inventory device would you use in the adhering to situations?

offering your kitchen v fresh food.

I keep a monitor of various items at my kitchen and also buy them when the share is low. Therefore, i would usage order quantity. b. Obtaining a daily newspaper.

You need a newspaper one after ~ the other. Periodic version would be ideal for together an inventory. c. Purchase gas for her car.

The fuel tank of my automobile can accommodate a certain amount that gas. Therefore, a hybrid kind model would be efficient.

To i beg your pardon of these items execute you impute the greatest stockout cost?

If over there is no much more gas in mine car, it would be the highest possible stockout expense as gas is not accessible just anywhere.

545: target Questions: 10, 13.

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10) You room a newsvendor selling the mountain Pedro time every morning. Prior to you acquire to work, you walk to the printer and buy the day’s file for $0.25 a copy. You market a copy the the mountain Pedro Times because that $1.00. Daily need is distributed normally with median 5 250 and standard deviation 5 50. At the end of each morning, any type of leftover duplicates are worthless and also they walk to a recycle bin.

how many duplicates of the mountain Pedro Times must you buy each morning?

Cost of underestimate = $1 – $0.25 = $0.75

Cost of overestimating the need = $0.25

Optimal Probability = expense of underestimating / (Cost of Overestimating – expense of Underestimating)

Optimal Probability = 0.75 / (0.75 + 0.25)

Optimal Probability = 0.75

Applying the NORMSINV duty on 0.75,

Value the z = 0.674

Now, the number of copies the SD time that need to be purchased every morning = Daily need of newspapers + (Probability that papers are not being sold x typical Deviation

The number of copies the SD time that should be purchased every morning = 250 + 0.674 X (50)

The number of copies of SD time that should be purchased every morning = 283.7= 284

Based on part (a), what is the probability that you will certainly run the end of stock?

The optimal probability, as was discovered out in the above calculations is 75%, therefore, there is a 25% probability of papers running out.

13) Dunstreet’s Department keep would choose to develop an list ordering plan of a 95 percent probability of not stocking out. To show your recommended procedure, usage as an example the ordering plan for white percale sheets. Demand for white percale sheets is 5,000 per year. The keep is open 365 days every year. Every two weeks (14 days) inventory is counted and a brand-new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is 5 per day. Over there are currently 150 sheets ~ above hand. How plenty of sheets need to you order?