Question

Dunstreet's Department Store would like to develop an inventory ordering policy of a 98 percent probability of not stocking out To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 3.900 per year. The store is open 365 days per year. Every three weeks (21 days) inventory is counted and a new order is placed. It takes 15 days for the sheets to be delivered. Standard deviation of demand for the sheets is four per day. There are currently 130 sheets on hand. es How many sheets should you order? (Use Excel's NORMSINV) function to find the correct critical value for the given a-level. Do not round intermediate calculations. Round " value to 2 decimal places and final answer to the nearest whole number.) Hint if you don't know how to use NORMSINVO function to find the z value for a given % level, watch the Hint" button on the left. Hint video by clicking the

Answer 1

Periodic review system also called fixed interval reorder system has four original economic order quantity assumptions: -

• There are no restrictions on lot size.
• ordering cost and carrying cost
• demand should be independent
• The lead time is constant.

Service level 98% NOR M S INV (0.98): 210 .05 n= 365 days : 2900 365 11units/dad ot P 21 days LT = 15 T 130 shaits 11(21+1) + (2-0512 1+15 xy)-130 205 36 x 130 -. 396-+-49.2-130 315 2 315 units nses