Essay
The annual demand for inventory item 67J is 6000 SKU's.Order lead time is 6 workdays, and the firm's "year" is 300 days (6 workdays weekly, times 50 weeks).Empirical analysis indicates that the daily standard deviation of SKU demand is 4 units.If the firm desires only a 5% chance of a stockout, during any inventory cycle:
A.What is the corresponding safety stock level?
B.What is the corresponding reorder point, R?
C.Suppose Q* = 400.Now if the firm is willing to be out of stock of 67J, an average of no more than two inventory cycles per year, what should be the safety stock level?
Correct Answer:
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A.( (z)(
) = (1.645)(9.798) = 16.118.Rou...View Answer
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Correct Answer:
Verified
A.( (z)(
) = (1.645)(9.798) = 16.118.Rou...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
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