The Purchasing Manager for a Firm Is Trying to Determine

question 2

Essay

The purchasing manager for a firm is trying to determine what the safety stock should be for a particular product.She has developed the following table, which gives the distribution of demand during the lead-time and the probabilities:
The carrying cost is $5 per unit per year, the ordering cost is $30 per order, and the stockout cost is $40 per unit.The reorder point is 60 units, and 6 orders are placed each year.What level of safety stock should be maintained?

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Definitions:

Heritability

A measure of how much of the variation in a trait within a population can be attributed to genetic differences between individuals in that population.

Genetically Influenced Traits

Characteristics and attributes that are affected by the genetic makeup of an individual, including physical attributes and susceptibility to certain diseases.

Interaction

The interplay that occurs when the effect of one factor (such as environment) depends on another factor (such as heredity).

Physical Appearance

The outward look or aspects of a person or object, which includes features like size, shape, color, and texture.