Submitted by: Submitted by houda
Views: 97
Words: 1682
Pages: 7
Category: Business and Industry
Date Submitted: 10/27/2014 06:50 PM
Question1:
1- Consider the continuous review policy (Q, R). Explain why the expected level of inventory before receiving the order is : × ×√ while the expected level of inventory immediately after receiving the order is: +× × √
Answer 1:
According to the continuous review policy, the inventory is continuously reviewed and an order is placed when the inventory level reaches the Reorder level R which is equal to the daily average demand times the lead time plus the safety stock: AGV x L + × ×√, during the lead time only the quantity AVG x L is used, and if the order is received exactly at the end of the lead time L, the expected level inventory after receiving the order is the new order quantity Q plus the safety stock × ×√
2- Consider the base-stock in periodic review. Explain why the expected level of inventory after receiving an order is equal to × + × × √ + while the expected level of inventory before an order arrives is × ×√ + .
According the periodic review policy, the inventory level is reviewed at a regular basis and an order is placed right after the review to reach the Base-stock level, the daily average demand during the period r, which is the period between 2 consecutive reviews, is ×, and from the order point until the next receiving the daily average demand is L ×, thus, the safety stock which represent a buffer during the lead time is × × √ + ( the time cycle is L+r). Consequently At the end of the lead time and before the reception of the order the inventory level equals to the safety stock × × √( +).After the order arrives, the expected inventory level which is supposed to cover the demand during the review period r reaches again the based stock level minus the daily average used during the lead time, which is ( L+) × + × × √( +)-L.AVG= × + × × √ +
3-Imagine that you operate a department store. List five products you sell, and order them from lowest target service level to highest target service level. Justify your...