Jimmy\'s Delicatessen sells large tins of Tom Tucker\'s Toffee. The deli uses a

Question

Jimmy's Delicatessen sells large tins of Tom Tucker's Toffee. The deli uses a periodic review system, checking in tins, so average demand during the reorder period and order lead time (13 days) is 91 tins. The standard ventory levels every 10 days, at which time an order is placed for more tins. Order lead time is 3 days. Average daily demand is 7 deviation of demand during this same 13-day period is 17 tins. Click the icon to view the table of z values. a Calculate the restocking level. Assume that the desired service level is 90% The restocking level is tins. (Enter your response rounded up to the next whole number) b. Suppose that the standard deviation of demand during the same 13-day period drops to 4 tins. What happens to the restocking level? The new restocking level istins. (Enter your response rounded up to the next whole number.) What happens to the restocking level when the the standard deviation of demand drops? The restocking level increases significantly because the standard deviation of demand decreased. This is true because the standard deviation of demand during the reorder period and lead time. A. restocking level is determined by the average demand during the reorder period and lead time plus z times the O B. The restocking level does not change. This is true because the restocking level is determined only by the average demand during the reorder period and lead time. O c. The restocking level drops slightly because the standard deviation of demand decreased. This is true because the restocking level ia determined by the average demand during the reorder period and lead time minus z times the standard deviation of demand during the reorder period and lead time. restocking level drops significantly because the standard deviation of demand decreased. This is true because the restocking level is determined by the average demand during the reorder period and lead time plus z times the standard deviation of demand during the reorder period and lead time. More Info z value 1.28 1.65 2.33 3.08 Resulting service level (%) 90 95 99.9 Print Done your ansW

Explanation / Answer

(a)

Restocking level (R) = R+L + Z*R+L

Given that R+L = 91 tins and R+L = 17 tins

R = 91 + 1.28 x 17 = 112.76 or 113

(b)

R = 91 + 1.28 x 4 = 96.12 or 96

Frm the above expressions/ formula of R, it is quite clear that the vlaue of R will decrese significantly with reduction of R+L because it is added to the average lead time demand after multiplying with Z. Option (D) is correct

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