The demand for barbecue grills has been fairly large in the past

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The demand for barbecue grills has been fairly large in the past several years, and Home Supplies, Inc., usually orders new barbeque grills five times a year. It is estimated that the ordering cost is $60 per order. The carrying cost is $10 per grill per year. Furthermore, Home Supplies, Inc., has estimated that the stockout cost is $50 per unit. The ROP is 650 units. Although the demand each year is high, it varies considerably. The demand during the lead time is shown in the following table:
DEMAND DURING LEAD TIME
PROBABILITY
600 0.30 650 0.20 700 0.10 750 0.10 800 0.05 850 0.05 900 0.05 950 0.05 1000 0.05 1050 0.03 1100 0.02 Total: 1.00
The lead time is 12 working days. How much safety stock should Home Supplies, Inc., maintain?
  • 11 years ago
Answer for: The demand for barbecue grills has been fairly large in the past
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