The Purchasing Manager for a Firm Is Trying to Determine

question 24

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:

Circumduction

The circular movement of a body part, such as a limb, that allows for the generation of a cone-shaped motion range.

Cuplike Depression

A cuplike depression refers to a concave or hollowed-out area that resembles the shape of a cup, often found in bone or organ structures.

Femoroacetabular

Pertaining to the femur bone and the acetabulum of the pelvis, often in the context of joint mechanics or disorders.

Talocrural

Talocrural refers to the ankle joint, where the tibia and fibula meet with the talus, facilitating up and down movement of the foot.