4. Gursoy Furnitures sells office chairs ordered from its flagship store. It costs $100 to place an order, and the lead time is two weeks. Demand during lead time is N(40, 1.96). Gursoy Furnitures estimates that each stockout causes a loss of $50 in future goodwill. It pays $60 for each chair and sells it for $100. The annual holding a chair inventory is 30% of its purchase cost. a) Assuming that all demand is backlogged, what are the reorder point and the safety stock level? b) To meet 99% service objective, what should be the safety stock level for Type 1 Service? For Type 2 Service?
4. Gursoy Furnitures sells office chairs ordered from its flagship store. It costs $100 to place an order, and the lead time is two weeks. Demand during lead time is N(40, 1.96). Gursoy Furnitures estimates that each stockout causes a loss of $50 in future goodwill. It pays $60 for each chair and sells it for $100. The annual holding a chair inventory is 30% of its purchase cost. a) Assuming that all demand is backlogged, what are the reorder point and the safety stock level? b) To meet 99% service objective, what should be the safety stock level for Type 1 Service? For Type 2 Service?
Chapter12: Sequences, Series And Binomial Theorem
Section12.3: Geometric Sequences And Series
Problem 12.58TI: What is the total effect on the economy of a government tax rebate of $500 to each household in...
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Transcribed Image Text:4. Gursoy Furnitures sells office chairs ordered from its flagship store. It costs $100
to place an order, and the lead time is two weeks. Demand during lead time is
N(40, 1.96). Gursoy Furnitures estimates that each stockout causes a loss of $50
in future goodwill. It pays $60 for each chair and sells it for $100. The annual
holding a chair inventory is 30% of its purchase cost.
a) Assuming that all demand is backlogged, what are the reorder point and the
safety stock level?
b) To meet 99% service objective, what should be the safety stock level for
Type 1 Service? For Type 2 Service?
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