(Solution) 15-20. Ryan's Liquor Shoppe Orders Scotch Whiskey Four Times A Year. The Lead Time For Reordering Is Estimated To Be 25 Days. | Snapessays.com


(Solution) 15-20. Ryan's Liquor Shoppe orders Scotch whiskey four times a year. The lead time for reordering is estimated to be 25 days.


15-20. Ryan’s Liquor Shoppe orders Scotch whiskey four times a year. The lead time for reordering is estimated to be 25 days. Average demand for Scotch whiskey is 2 cases per day (320 business days per year). Ryan’s has estimated the stock-out cost to be $50 per case and the inventory holding cost to be approximately $30 per case per year. Based on past reorder periods, actual demand distribution is:

 

Demand during Lead Time (DDLT) Frequency

 

40 cases 32 times

 

45 64

 

50 128

 

55 64

 

60 32

 

 

Ryan’s is considering carrying 0, 5, or 10 boxes of safety stock.

 

a. Determine the annual shortage cost (TSC) and safety stock holding cost (SHC).

 

b. Determine the optimal level of safety stock.

 


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This question was answered on: May 23, 2022

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