The annual demand for a product is 16,800 units. The weekly demand is 323 units, with a standard deviation of 95 units. The cost to place an order is $31.50, and the time from ordering to receipt is two weeks. The annual inventory carrying cost is $0.20 per unit. Find the reorder point necessary to provide a 90% service probability. Suppose the production manager is asked to reduce the safety stock of this item by 40 percent. If she does so, what will the new service probability be? Round to the whole number for the final answer.

The annual demand for a product is 16,800 units. The weekly demand is 323 units, with a standard deviation of 95 units. The cost to place an order is $31.50, and the time from ordering to receipt is two weeks. The annual inventory carrying cost is $0.20 per unit. Find the reorder point necessary to provide a 90% service probability. Suppose the production manager is asked to reduce the safety stock of this item by 40 percent. If she does so, what will the new service probability be? Round to the whole number for the final answer.

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Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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