Module6Safetystockmodels

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Definereorderlevel?
Definesafetystock?Whyisitnecessarytohavesafetystock?
Whatistherelationshipbetweenservicelevelandsafetystock?
Whatistheannualcostassociatedwithholdingasafetystockofkunits?
Howdowecomputesafetystockusingthestandardnormaldistributionforagiven
servicelevel?
6. Howistheorderquantityandreorderlevelrelated?
7. Writetheexpressionfortotalcostinaprobabilisticsetting?
8. Iftheleadtimedemandhasastandarddeviationof25/week,whatisthestandard
deviationiftheleadtimeis3weeks?
9. Iftherearetwoitemshavingthesamemeanandstandarddeviation,whatisthe
advantageiftheycanbesubstitutedforeachother?
10. Howdoesthevariationintheleadtimeinfluencethesafetystock?

Problems
1. ThefollowinginformationaboutLTDisgiven.Thevaluesare200,250,300350with
probabilities0.2,0.3,0.3and0.2.FindthereorderlevelifCc=Rs4/unit/yearandCs=Rs
10/unit/year?
2. ThefollowinginformationaboutLTDisgiven.Thevaluesare300,350,400450and500
withprobabilities0.2,0.25,0.3and0.2and0.05.FindthereorderlevelifCc=Rs
4/unit/yearandCs=Rs10/unit/year?
3. LTDfollowsauniformdistribution20080.Findthereorderlevelforaservicelevelof
75%
4. LTDfollowsanormaldistributionwith=200and=40.Findthereorderlevelfora
servicelevelof95%(z=1.645)?
5. LTDfollowsanormaldistributionwith=200and=40.FindthereorderlevelwhenQ
=1250,D=10000,Cs=10,Cc=4?
6. ConsiderasingleitemwithD=12000/year,C0=400,Cc=12/unit/year,i=20%andC=
400.WritetheexpressionforTCintheusualnotationforaprobabilisticinventory
modelconsideringQandrasdecisionvariables?FindQandr.
7. ConsiderasingleitemwithD=16000/year,C0=300,Cc=10/unit/year,i=20%andC=
500.WritetheexpressionforTCintheusualnotationforaprobabilisticinventory
modelconsideringQandrasdecisionvariables?FindQandr.

8. ConsiderasingleitemwithD=12000/year,C0=400,Cc=12/unit/year,i=20%andC=
400.IfLT=2weeksandweeklydemandisuniform(200,280)findrconsideringCs=
20/unitshort?
9. Ifweeklydemandisnormal(240,50)findsafetystockSS,consideringLT=2weeksandz
=1.645for95%areaunderthenormalcurve?
10. Considertheinventoryproblemforasingleitemwithtimevaryingdemand(Dj)for
monthj.UseC0andiCintheusualnotation.Formulatetheproblemasanoptimization
problem?
11. Ifdemandfor4monthsis800,1200,1200and1000,findthefirstlotsizeusingSilver
Mealheuristic?
UseC0=300andCc=2
12. Ifdemandfor8monthsis1000,600,800,1200,1000,1200,900and1000,findthefirst
twolotsizesusingSilverMealheuristicandPartperiodbalancing?UseC0=300andCc=
2
13. Thedemandfor8monthsis1000,600,800,1200,1000,1200,900and1000.Findthe
EOQUseC0=300andCc=2/unit/year.Findtheorderingandinventorycostsfor8
monthsusingtheEOQandthemonthlydata?
14. ConsidertwoitemswithLTD=300and500respectively.ThevarianceofLTDis400and
900forthetwoitems.Assumenormaldistributionand95%servicelevel.Whatisthe
gaininthesafetystockifthesecanbesubstituted?
15. ConsidertwoitemswithD=150and200respectively.Thevarianceofweeklydemand
is400and900forthetwoitems.Assumenormaldistribution,95%servicelevelandLT=
2weeks.Whatisthegaininthesafetystockifthesecanbesubstituted?