Exam 12: Managing Uncertainty in a Supply Chain: Safety Inventory

Figure 1: Inventory Profile for Periodic Review Policy -What does the letter D represent in Figure 1?

The required safety inventory

Scenario 12.3 - The Cat Café Daily demand for cat litter at the Cat Café in Jones is 1500 ounces with a standard deviation of 300 ounces.The proprietor orders the best cat litter money can buy online,and the average shipping time is 5 days.Of course,if the order is placed at the end of the week,then it may take a while longer to receive the shipment,so the standard deviation of lead time is 2 days.The state health department keeps a close eye on the condition of the Cat Café;a cat-loving inspector visits at least twice a week,ostensibly to inspect,but mostly to pet his favorite Scottish Fold cat named Groundskeeper Willie. -Suppose the café wishes to carry 8 days of demand as their safety inventory.What service level would they achieve?

Scenario 12.1 - Charm City Avon Barksdale's operation uses large quantities of prepaid cell phones,on average 500 per week with a standard deviation of 45.The lead time for their own brand of prepaid cell phones is two weeks and they have a lot size of 125 phones. -Suppose Mr.Barksdale sets his reorder point at 1100 phones.What is his average cell phone inventory?

In a periodic review system,the order up to level

As retailers decrease the level of safety inventory they carry,the distributor will have to

In most supply chains,the key to reducing the underlying forecast uncertainty is to link all forecasts throughout the supply chain to customer demand data.

The ability to provide a high level of product availability to customers while carrying very low levels of safety inventory in its supply chain has been a key to success at which company?

The issue of product availability and the level of safety inventory is particularly significant in industries where

As the safety inventory is increased,

Aggregation reduces the standard deviation of demand

Safety inventory is inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period.

Figure 1: Inventory Profile for Periodic Review Policy -What does the letter B represent in Figure 1?

The fraction of replenishment cycles that end with all the customer demand being met is the

A(n)________ in supply uncertainty can help ________ safety inventory required without hurting product availability.

For a small retail enterprise,a continuous review policy is easier to implement that a periodic review policy.

Explain the impact of supplier lead time on safety inventory.

Carrying more inventory upstream in a multiechelon supply chain