Managing Operations Across the Supply Chain 1st Edition by Morgan Swink,Steven Melnyk,Bixby Cooper, Janet Hartley

Exercise 22

"This should be a simple issue.You know that our average weekly sales are $2,000 and the flow time is one day.Surely with this information, you should have no problem maintaining an inventory level of $200 to serve the sales." With these words, the director of fi nance leaves your offi ce.Now, you have a challenge before you-that of determining whether the analysis carried out by the director makes sense.
a.Using Little's Law, determine anticipated flow time and compare it with the expected flow time? ( Hint: the flow time is in days, the sales in weeks; use a common unit of measure.)
b.Keeping the flow times and throughputs constant, determine if the process as currently described can be supported by $200 of inventory.If not, what options should you consider?