Quiz: Weekly demand for the latest smart lamp at Best Deal electronic store is 250 units with a standard deviation of 40 units. The cost of placing an order is $100, and the time from ordering to receipt from the manufacturer is four weeks. The annual inventory carrying (holding) cost is estimated at $0.65 per unit (assume 52 weeks in a year). Sarah, the store manager, is in charge of all inventory and ordering decisions. Part A: What is the optimal order quantity? Part B: If Sarah wants to make sure that the chance of not stocking out in a cycle is 98%, what should be the reorder point? Part C: What is the average number of backorders in a cycle? Part D: For practical purpose, Sarah decides instead to set the monthly reorder point to 1,100 units. What is the service level based on this reorder point?

Quiz: Weekly demand for the latest smart lamp at Best Deal electronic store is 250 units with a standard deviation of 40 units. The cost of placing an order is $100, and the time from ordering to receipt from the manufacturer is four weeks. The annual inventory carrying (holding) cost is estimated at $0.65 per unit (assume 52 weeks in a year). Sarah, the store manager, is in charge of all inventory and ordering decisions. Part A: What is the optimal order quantity? Part B: If Sarah wants to make sure that the chance of not stocking out in a cycle is 98%, what should be the reorder point? Part C: What is the average number of backorders in a cycle? Part D: For practical purpose, Sarah decides instead to set the monthly reorder point to 1,100 units. What is the service level based on this reorder point?

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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The chapter presented various approaches for the control of inventory investment. Discuss three additional approaches not included that might involve supply chain managers.
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