The Spice House sells on average 10 pounds of pepper per week. There is a four-w

Question

The Spice House sells on average 10 pounds of pepper per week. There is a four-week lead time, so the purchasing manager reorders pepper when inventory falls to 55 pounds. The supplier has informed the Spice House that because of some warehouse issues, its lead time will now be nine weeks. The purchase manager has consequently increased the reorder point for pepper to 110 pounds. How does this affect the cycle service level (i.e., the probability that all demand will be met during the cycle) for pepper? The cycle service level will (check one): ___ Increase ___ Decrease ___ Remain unchanged

Explain your answer

Explanation / Answer

Cycle service level = P(z)

ROP = d*L+z*?*?L

1 ---> 55 = 10*4+z*?*?4 => z1*? = 7.5

2 ---> 110 = 10*9+z*?*?9 => z2*? = 6.67

Considering that the variation in demand remains the same, the cycle service level will decrease

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