Managing Supply Chain and Operations 1st Edition by Thomas Foster ,Scott Sampson,Cynthia Wallin,Scott Webb

Exercise 25

A company manages its inventory for a specific item using the periodic review inventory model with seven days between orders. It is currently time to place an order, and the company notes that there are 200 items on hand. The item to be replenished has a lead time of two days with a daily demand of 400 units. The standard deviation of daily demand during the uncertainty period has been calculated to be 60. If the company wants to have at least a 90% service level for this item, what should its order quantity be?