A drugstore uses fixed-order cycles for many of the items it stocks. The manager
ID: 349273 • Letter: A
Question
A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service level of .98. The order interval is 12 days, and lead time is 3 days. Average demand for one item is 70 units per day, and the standard deviation of demand is 3 units per day. Given the on-hand inventory at the reorder time for each order cycle shown in the following table.
Use Table.
Determine the order quantities for cycles 1, 2, and 3: (Round your answers to the nearest whole number)
Explanation / Answer
Service level = .98 , Z-value from probability table = 2.05
Order interval , OI = 11 days
Lead time, LT = 2 days
Demand, d= 70/day
?d= 5/day
A= At hand units
Order quantity formula = d (OI + LT) + Z?d (OI+LT)1/2 - A = 70 * 13 + 2.05 (5) * ?13 - 35 = 910+ 36.95 -35 = 912 units
Similary, for Cycle 2 = 70 * 13 + 2.05 (5) * ?13 - 10 = 910 + 36.95 - 10 = 937 units
And for Cycle 3 = 70 * 13 + 2.05 (5) * ?13 - 100 = 910+36.95 - 100 = 847 units
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.