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ABC Convenient stores uses fixed-time period model to determine order quantity for their popular chewing gum...

ABC Convenient stores uses fixed-time period model to determine order quantity for their popular chewing gum (Supergum). Daily demand for Supergum is 100 units with a standard deviation of 20 units. The review period is 10 days and lead time is 6 days. At the beginning of this review period there are 50 units in stock. If 98% service probability is desired, how many units should be ordered?

business   Operations-Management   
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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.

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