Asked by Helmut Andres Florencia Roldan on Jul 17, 2024
Verified
Weekly demand for avocados at the Guac Shop is normally distributed with a mean of 2500 and a standard deviation of 650.The store manager has decided to follow a periodic review policy to manage inventory of avocados.They plan to order every two weeks.The farmers currently take two weeks to fill an order.Given a desired CSL of 97.5 percent,how much safety inventory should the Guac Shop carry? What should their OUL be?
Periodic Review Policy
A method of inventory control where stock levels are checked at fixed intervals and orders are placed accordingly.
CSL (Cycle Service Level)
An inventory management metric that measures the probability that the inventory level will not stock out within one replenishment cycle, typically expressed as a percentage.
Normally Distributed
Normally distributed refers to a statistical distribution where data is symmetrically distributed around the mean, forming a bell-shaped curve commonly seen in many natural and social phenomena.
- Compute inventory levels for safety and determine reorder points (ROP) based on specific demand distributions.
- Distinguish between the continuous and periodic review strategies for inventory management.
Verified Answer
IB
Iliana BorreroJul 23, 2024
Final Answer :
ss = Fs-1(CSL)× σT + L
= NORMSINV(0.975)× (650 × 4\sqrt { 4 }4 )
= 2547.95 ≈ 2548
OUL = DT + L + ss
= 2500(4)+ 2548
= 12,548
= NORMSINV(0.975)× (650 × 4\sqrt { 4 }4 )
= 2547.95 ≈ 2548
OUL = DT + L + ss
= 2500(4)+ 2548
= 12,548
Learning Objectives
- Compute inventory levels for safety and determine reorder points (ROP) based on specific demand distributions.
- Distinguish between the continuous and periodic review strategies for inventory management.