Weekly demand for private label washing machines at Arcelik, a Turkish department store chain, is normally distributed with a me
an of 500 and a standard deviation of 200. Arcelik has a source in China that delivers machines at a cost of 200 euros. The fixed cost of placing an order with a supplier is $100. The lead time required by the supplier is 9 weeks. A European supplier has offered to deliver washing machines with a guaranteed lead time of one week at a cost of 210 euro. The fixed cost of placing an order is unlikely to change and is expected to remain at $100 per order. Arcelik has a holding cost of 25% and targets a cycle service level of 99%. Should Arcelik accept the European supplier’s offer?
1 answer:
Answer:
Check the explanation
Explanation:
Mean, D = 500
Standard deviation, ao = 300
Mean, L = 9 weeks
Standard deviation, .s1 = 6 weeks
Use the following formula to calculate safety stock level:
Safety stock = = 2093.7
In case of European supplier,
Safety stock = = 699
Kindly check the attached images below to see the spreadsheet solution to the question above
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