Dunstreets Department store would like to develop an inventory ordering policy of 95% probability of not stocking. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets Demand for white percale sheets is 5,000 per uear. The store is open 365 days per year. Every 2 weeks (14 days) inventory is counted and a new order is placed. It takes 10 days for the sheet to be delivered. Standard deviation of demand for the sheets is 5 per day. There is currently 150 sheets on hand. How many sheets should you order
The first step would be to find the z-value for a service probability of 0.95.
use Excel's NORM.S.INV for this purpose:
z=NORM.S.INV(0.95)=1.64z=NORM.S.INV(0.95)=1.64
Next we find the target inventory level:
Target = Daily Demand×(Lead Time+Review Time)+z×Standard Deviation of Daily Demand×√Lead Time+Review Time
=5,000/365×(10+14)+1.64∗5∗√10+14 ≈369 sheets
The store has 150 sheets available. Hence, the store should order 369−150=219 sheets
Dunstreets Department store would like to develop an inventory ordering policy of 95% probability of not...
Dunstreet's Department Store would like to develop an inventory ordering policy of a 95 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 3,400 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 9 days for the sheets to be delivered. Standard deviation of...
Dunstreet's Department Store would like to develop an inventory ordering policy with a 99 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 4,300 per year. The store is open 365 days per year. Every four weeks (28 days) inventory is counted and a new order is placed. It takes 12 days for the sheets to be delivered. Standard deviation of...
Dunstreet's Department Store would like to develop an inventory ordering policy of a 90 percent probability of not stocking out. To Wustrate your recommended procedure, use as an example the ordering policy for white percale sheets. Demand for white percale sheets is 3.400 per year. The store is open 365 days per year. Every two weeks (14 days) inventory is counted and a new order is placed. It takes 12 days for the sheets to be delivered. Standard deviation of...
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...
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