company begins a review of ordering policies for its continuous review system by

Question

company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of SKUs. Following are the characteristics of one item: followsDemand (D) = 8080 units/week (Assume 5252 weeks per year) followsOrdering and setup cost (S) = $7575/order followsHolding cost (H) = $1414/unit/year followsLead time (L) = 11 week(s) followsStandard deviation of weekly demand = 2020 units followsCycle-service level = 9696 percent followsEOQ = 211211 units a. What value of P gives the same approximate number of orders per year as the EOQ? nothing weeks. (Enter your response rounded to the nearest whole number.) b. To provide a 9696 percent cycle-service level, the average safety stock is nothing units. (Enter your response rounded to the nearest whole number.) To provide a 9696 percent cycle-service level, the target inventory level is nothing units. (Enter your response rounded to the nearest whole number.)

Explanation / Answer

a) Unable to answer the a part as P is not defined

b) safety stock = z x standard deviation of demand x root of lead time

z value for 96 % service level = 1.75

safety stock = 1.75 x 20 x root of 11 = 116.08 units = 116 units approximately

c) Target inventory = lead time x demand + Safety stock = 11 x 80 + 116.08 = 996.08 units = 996 units approximately..

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.