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NEWBACGROUP2FT

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Cate Muigai
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62 views

NEWBACGROUP2FT

Uploaded by

Cate Muigai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 5

Group 2 members

1.muigai Cathrine 19/05988.


2.
3.
4.
5.
ASSIGNMENT
XYZ has a policy of ordering stock when level falls to 15 units the quantity ordered from the
supply is always 20 units. The stock at beginning of 1st week is 20 units. The stock holding costs
are sh. 10 per week / unit. The cost of placing one order = 25. The stocks out cost are Sh100 per
unit. The usage (demand) and lead time (time taken by supply to deliver stock) is uncertain as
shown below.
NB: Ordering is done the following week upon discovery of the shortages.
Demand Probability Lead time Probability

0 0.02 1 0.23

1 0.08 2 0.45

2 0.22 3 0.17

3 0.34 4 0.09

4 0.18 5 0.06

5 0.09 1.00

6 0.07

1.00

Required;
Use the following random numbers
68 52 50 90 59 08 72 44 95 85 81 93 28 89 15 60 03
Use 14 trial numbers to find the cost
Answer

Step 1: Find the cumulative probability for both demand and lead time.

Step 2: Estimate the range using the cumulative probabilities.

Step 3: Calculate the opening stock for each week using the formula (available
stock-demand=opening stock)

TABLE 1
Demand Probability Cumulative Range Lead Probability Cumulative Range
probability time probability

0 0.02 0.02 00-01 1 0.23 0.23 00-22

1 0.08 0.08 02-09 2 0.45 0.68 23-67

2 0.22 0.22 10-31 3 0.17 0.85 68-84

3 0.34 0.34 32-65 4 0.09 0.94 85-93

4 0.18 0.18 66-83 5 0.06 1.00 94-99

5 0.09 0.09 84-92 1.00

6 0.07 0.07 93-99

1.00

Table 2

To get the demand we use random number to check under which range it falls
into

week Opening Ordered Stock Random Demand


stock stock available number

1. 20 0 20 68 4
2. 16 0 16 52 3

3. 13 0 13 50 3

4. 10 20 30 90 5

5. 25 0 25 59 3

6. 22 0 22 08 1

7. 21 0 21 72 4

8. 17 0 17 44 3

9. 14 0 14 95 6

10. 8 20 28 85 5

11. 23 0 23 81 4

12. 19 0 19 93 6

13. 13 0 13 28 2

14. 11 20 31 89 5

Step 4: we calculate the closing, holding and ordering cost of all units as well as
the total costs.

Closing stock=the opening stock of the preceding week

Table 3

Closing stock (a) Holding cost Ordering cost Total cost=holding


(a*10) =25/- cost+ ordering
cost

16 160 160
13 130 130

10 100 100

25 250 25 275

22 220 220

21 210 210

17 170 170

14 140 140

8 80 80

23 230 25 255

19 190 190

13 130 130

11 110 110

26 260 25 285

Total cost = 2595

The total cost for the 14 trials done is 2595/-.

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