Question 3. (Allow 3 pages for answers)
Explain the basic strategies that an aggregate planner has available to balance the various costs and meet demandQuestion 4. (Allow 4 pages for answers)Alien Auto Co. distributes parts for foreign cars in a large Midwestern city. Demand for a particular size of oil filter has been uniform. The lead time to obtain the filters is 1 month, and the average use rate is 500 per month. The lead-time use is normally distributed with a standard deviation of 70 units. Order cost is $12, and holding cost is $0.30 a year per filter. The estimated cost of a stock out is $10.
a. What is the EOQ?
b. How many orders per year will be placed at this EOQ?
c. What is the optimum probability of a stock out?
d. What is the optimum reorder level? Note: The Z value for a service level of 99.65% is 2.7
e. How much will Alien Auto spend per year to hold inventory on this filter if it implements the values you determined above?