A product has a normally distributed demand of 240 units per month, a monthly holding cost...
A product has a normally distributed demand of 240 units per month, a monthly holding cost of $0.25 per unit and a penalty per unit short of $5. Currently we are ordering this product through an (R,S) policy, R of 2 months and average order quantities of Q = 480.
Homework Answers
Answer:
Replenishment cycle in months = average monthly demand x lead time
Average monthly demand = 240 units per month
Lead time = 0.5 months
Thus, Replenishment cycle in months = 240x 0.5 = 120 months
Since after every two months, average order quantity is 480 units
Thus,
Actual replenishment cycle = average order quantity / Replenishment cycle in months
Actual replenishment cycle = 480 / 120 = 4 months
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