A restaurant uses an average of 50 jars of a special sauce each week. Weekly usage of sauce has a standard deviation of 3 jars. The manager is willing to accept no more than a 10 percent risk of stock out during lead time , which is two weeks. Assume the distribution of usage is normal.

a. Which of the above formulas is appropriate for this situation? Why?

b. Determine the value of z.

c. Determine the ROP.

Question

A restaurant uses an average of 50 jars of a special sauce each week. Weekly usage of sauce has a standard deviation of 3 jars. The manager is willing to accept no more than a 10 percent risk of stock out during lead time , which is two weeks. Assume the distribution of usage is normal.

a. Which of the above formulas is appropriate for this situation? Why?

b. Determine the value of z.

c. Determine the ROP.

a. Which of the above formulas is appropriate for this situation? Why?

b. Determine the value of z.

c. Determine the ROP.

Accepted Answer

[latex]\overline{d}[/latex]= 50 jars per week LT = 2 weeks

[latex]\sigma _d =3[/latex] jars per week Acceptable risk = 10 percent, so service level is .90

a. Because only demand is variable (i.e., has a standard deviation), Formula 13-13

[latex]ROP = \overline{d} imes LT + z\sigma _d\sqrt{LT}[/latex] (13–13)

is appropriate.

b. From Appendix B, Table B,

Table B 1. Areas under the standardized normal curve, from -∞ to - z
z	·00	0.01	0.02	0.03	0.04	0.05	0.06	0.07	0.08	0.09
-3.4	0.0003	0.0003	0.0003	0.0003	0.0003	0.0003	0.0003	0.0003	0.0003	0.0002
-3.3	0.0005	0.0005	0.0005	0.0004	0.0004	0.0004	0.0004	0.0004	0.0004	0.0003
-3.2	0.0007	0.0007	0.0006	0.0006	0.0006	0.0006	0.0006	0.0005	0.0005	0.0005
-3.1	0.001	0.0009	0.0009	0.0009	0.0008	0.0008	0.0008	0.0008	0.0007	0.0007
-3	0.0013	0.0013	0.0013	0.0012	0.0012	0.0011	0.0011	0.0011	0.001	0.001
-2.9	0.0019	0.0018	0.0018	0.0017	0.0016	0.0016	0.0015	0.0015	0.0014	0.0014
-2.8	0.0026	0.0025	0.0024	0.0023	0.0023	0.0022	0.0021	0.0021	0.002	0.0019
-2.7	0.0035	0.0034	0.0033	0.0032	0.0031	0.003	0.0029	0.0028	0.0027	0.0026
-2.6	0.0047	0.0045	0.0044	0.0043	0.0041	0.004	0.0039	0.0038	0.0037	0.0036
-2.5	0.0062	0.006	0.0059	0.0057	0.0055	0.0054	0.0052	0.0051	0.0049	0.0048
-2.4	0.0082	0.008	0.0078	0.0075	0.0073	0.0071	0.0069	0.0068	0.0066	0.0064
-2.3	0.0107	0.0104	0.0102	0.0099	0.0096	0.0094	0.0091	0.0089	0.0087	0.0084
-2.2	0.0139	0.0136	0.0132	0.0129	0.0125	0.0122	0.0119	0.0116	0.0113	0.011
-2.1	0.0179	0.0174	0.017	0.0166	0.0162	0.0158	0.0154	0.015	0.0146	0.0143
-2	0.0228	0.0222	0.0217	0.0212	0.0207	0.0202	0.0197	0.0192	0.0188	0.0183
-1.9	0.0287	0.0281	0.0274	0.0268	0.0262	0.0256	0.025	0.0244	0.0239	0.0233
-1.8	0.0359	0.0351	0.0344	0.0336	0.0329	0.0322	0.0314	0.0307	0.0301	0.0294
-1.7	0.0446	0.0436	0.0427	0.0418	0.0409	0.0401	0.0392	0.0384	0.0375	0.0367
-1.6	0.0548	0.0537	0.0526	0.0516	0.0505	0.0495	0.0485	0.0475	0.0465	0.0455
-1.5	0.0668	0.0655	0.0643	0.063	0.0618	0.0606	0.0594	0.0582	0.0571	0.0559
-1.4	0.0808	0.0793	0.0778	0.0764	0.0749	0.0735	0.0721	0.0708	0.0694	0.0681
-1.3	0.0958	0.0951	0.0934	0.0918	0.0901	0.0885	0.0869	0.0853	0.0838	0.0823
-1.2	0.1151	0.1131	0.1112	0.1093	0.1075	0.1056	0.103	0.102	0.1003	0.0985
-1.1	0.1357	0.1335	0.1314	0.1292	0.1271	0.1251	0.123	0.121	0.119	0.117
-1.0	0.1587	0.1562	0.1539	0.1515	0.1492	0.1469	0.1446	0.1423	0.1401	0.1379
-0.9	0.1841	0.1814	0.1788	0.1762	0.1736	0.1711	0.1685	0.166	0.1635	0.1611
-0.8	0.2119	0.209	0.2061	0.2033	0.2005	0.1977	0.1949	0.1922	0.1894	0.1867
-0.7	0.242	0.2389	0.2358	0.2327	0.2296	0.2266	0.2236	0.2206	0.2177	0.2148
-0.6	0.2743	0.2709	0.2676	0.2643	0.2611	0.2578	0.2546	0.2514	0.2483	0.2451
-0.5	0.3085	0.305	0.3015	0.2981	0.2946	0.2912	0.2877	0.2843	0.281	0.2776
-0.04	0.3446	0.3409	0.3372	0.3336	0.33	0.3264	0.3228	0.3192	0.3156	0.3121
-0.3	0.3821	0.3783	0.3745	0.3707	0.3669	0.3632	0.3594	0.3557	0.352	0.3483
-0.2	0.4207	0.4168	0.4129	0.409	0.4052	0.4013	0.3974	0.3936	0.3897	0.3859
-0.1	0.4602	0.4562	0.4522	0.4483	0.4443	0.4404	0.4364	0.4325	0.4286	0.4247
-0·0	0.5	0.496	0.492	0.488	0.484	0.4801	0.4761	0.4721	0.4681	0.4641

Table B (concluded) 2. Areas under the standardized normal curve, from - ∞ to + z
z	·00	0.01	0.02	0.03	0.04	0.05	0.06	0.07	0.08	0.09
0	0.5	0.504	0.508	0.512	0.56	0.5199	0.5239	0.5279	0.5319	0.5359
.1	0.5398	0.5438	0.5478	0.5517	0.5557	0.5596	0.5636	0.5675	0.5714	0.5753
.2	0.5793	0.5832	0.5871	0.591	0.5948	0.5987	0.6026	0.6064	0.6103	0.6141
.3	0.6179	0.6217	0.6255	0.6293	0.6331	0.6368	0.6406	0.6443	0.648	0.6517
.4	0.6554	0.6591	0.6628	0.6664	0.67	0.6736	0.6772	0.6808	0.6844	0.6879
.5	0.6915	0.695	0.6985	0.7019	0.7054	0.7088	0.7123	0.7157	0.719	0.7224
.6	0.7257	0.7291	0.7324	0.7357	0.7389	0.7422	0.7454	0.7486	0.7517	0.7549
.7	0.758	0.7611	0.7642	0.7673	0.7703	0.7734	0.7764	0.7794	0.7823	0.7852
.8	0.7881	0.791	0.7939	0.7967	0.7995	0.8023	0.8051	0.8078	0.8106	0.8133
.9	0.8159	0.8186	0.8212	0.8238	0.8264	0.8289	0.8315	0.834	0.8365	0.8389
1.0	0.8413	0.8438	0.8461	0.8485	0.8508	0.8531	0.8554	0.8577	0.8599	0.8621
1.1	0.8643	0.8665	0.8686	0.8708	0.8729	0.8749	0.877	0.879	0.881	0.883
1.2	0.8849	0.8869	0.8888	0.8907	..8925	0.8944	0.8962	0.898	0.8997	0.9015
1.3	0.9032	0.9049	0.9066	0.9082	0.9099	0.9115	0.9131	0.9147	0.9162	0.9177
1.4	0.9192	0.9207	0.9222	0.9236	0.9251	0.9265	0.9279	0.9292	0.9306	0.9319
1.5	0.9332	0.9345	0.9357	0.937	0.9382	0.9394	0.9406	0.9418	0.9429	0.9441
1.6	0.9452	0.9463	0.9474	0.9484	0.9495	0.9505	0.9515	0.9525	0.9535	0.9545
1.7	0.9554	0.9564	0.9573	0.9582	0.9591	0.9599	0.9608	0.9616	0.9625	0.9633
1.8	0.9641	0.9649	0.9656	0.9664	0.9671	0.9678	0.9686	0.9693	0.9699	0.9706
1.9	0.9713	0.9719	0.9726	0.9732	0.9738	0.9744	0.975	0.9756	0.9761	0.9767
2.0	0.9772	0.9778	0.9783	0.9788	0.9793	0.9798	0.9803	0.9808	0.9812	0.9817
2.1	0.9821	0.9826	0.983	0.9834	0.9838	0.9842	0.9846	0.985	0.9854	0.9857
2.2	0.9861	0.9864	0.9868	0.9871	0.9875	0.9878	0.9881	0.9884	0.9887	0.989
2.3	0.9893	0.9896	0.9898	0.9901	0.9904	0.9906	0.9909	0.9911	0.9913	0.9916
2.4	0.9918	0.992	0.9922	0.9925	0.9927	0.9929	0.9931	0.9932	0.9934	0.9936
2.5	0.9938	0.994	0.9941	0.9943	0.9945	0.9946	0.9948	0.9949	0.9951	0.9952
2.6	0.9953	0.9955	0.9956	0.9957	0.9959	0.996	0.9961	0.9962	0.9963	0.9964
2.7	0.9965	0.9966	0.9967	0.9968	0.9969	0.997	0.9971	0.9972	0.9973	0.9974
2.8	0.9974	0.9975	0.9976	0.9977	0.9977	0.9978	0.9979	0.9979	0.998	0.9981
2.9	0.9981	0.9982	0.9982	0.9983	0.9984	0.9984	0.9985	0.9885	0.9986	0.9986
3.0	0.9987	0.9987	0.9987	0.9988	0.9988	0.9989	0.9989	0.9989	0.999	0.999
3.1	0.999	0.9991	0.9991	0.9991	0.9992	0.9992	0.9992	0.9992	0.9993	0.9993
3.2	0.9993	0.9993	0.9994	0.9994	0.9994	0.9994	0.9994	0.9995	0.9995	0.9995
3.3	0.9995	0.9995	0.9995	0.9996	0.9996	0.9996	0.9996	0.9996	0.9996	0.9997
3.4	0.9997	0.9997	0.9997	0.9997	0.9997	0.9997	0.9997	0.9997	0.9997	0.9998

using a service level of .9000, you obtain z = + 1.28.

c. [latex]ROP = \overline{d} imes LT + z\sigma _d\sqrt{LT}= 50 imes 2 + 1.28(3)\sqrt{2} =100 + 5.43 = 105.43[/latex].

Because the inventory is discrete units (jars), we round this amount to 106.(Generally, round up

Question 13.9: A restaurant uses an average of 50 jars of a special sauce e...

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