The implied level of safety stock in the organization’s system. Concept Introduction: A safety stock is an additional amount of stocks maintained by businesses in facing unforeseen events such as stock outs. Such shortfalls in stocks may be related to raw material or even packaging. The unforeseen events that cause stock outs may be in relation to demand or supply. Sufficient levels of safety stocks enable businesses to continue operations without disruptions even at troublesome times.

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Chapter 6, Problem 5P

(a)

Summary Introduction

Interpretation:The implied level of safety stock in the organization’s system.

Concept Introduction:A safety stock is an additional amount of stocks maintained by businesses in facing unforeseen events such as stock outs. Such shortfalls in stocks may be related to raw material or even packaging. The unforeseen events that cause stock outs may be in relation to demand or supply. Sufficient levels of safety stocks enable businesses to continue operations without disruptions even at troublesome times.

(b)

Summary Introduction

Interpretation:The anticipated decrease in waiting time provided that one container was removed.

Concept Introduction:Lead time is period of time between one operation and the next within a process. It is often used in operations management with regard to production lines. It is typically the time taken for the material to reach a work station from the previous one. In relation to the given scenario, if one container is being removed, the waiting time calculated previously must be reduced to keep up with previous timings.

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