The Daily Sales of a Peanut Butter at Power's Grocery

question 62

Short Answer

The daily sales of a peanut butter at Power's Grocery are normally distributed, with a mean of 12 jars and a standard deviation of 4. The manager checks the inventories on shelves and places an order every three days. Delivery lead time is two days.
-In a noninstantaneous receipt model, daily demand is 55 units and daily production is 120 units, C_o=$70 and C_c=$4 per unit/year. The production facility operates 300 days per year. What is the optimal order quantity?

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Definitions:

Factory Overhead Rate

A rate used to assign or allocate factory overhead costs to individual units of production, usually based on a standard measure such as labor hours or machine hours.

Direct Labor Cost

The total of all wages paid to employees who are directly involved in the production of goods or services.

Internal Stakeholders

Individuals or groups within an organization who are directly impacted by its actions, decisions, and outcomes, such as employees, managers, and owners.

External Stakeholders

Individuals or groups outside of a company who are affected by or have an interest in its operations, such as customers, suppliers, and the community.