W2A2-And attachments

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Safety Stock and Reorder Point

Consider the following data.

Inventory Item

Average Demand (Annual)

Sigma (Std. Dev.) of Demand During Lead Time

Item Unit Cost

F-11001

15,000

100

$250.00

K-12002

100,000

300

$2.00

L-13003

250,000

200

$0.20

N-14004

300,000

400

$1.00

P-21001

50,000

60

$125.00

S-22002

80,000

75

$30.00

Note: All items are independent demand items.

Based on the above data:

  • Calculate the safety stock quantities and the inventory cost associated with safety stock (based on the item unit cost) for the inventory items at four different service levels (50%, 80%, 90%, and 95%).
  • Develop a table to present the inventory quantities and the safety stock costs at each service level.
  • Assuming that demand occurs at a steady pace every month (in other words, there is no seasonality or cyclical change in the level of demand), calculate the reorder point for each item assuming a lead time of two months and a service level of 90%.
  • Develop a table to present the reorder points for all products under these conditions (two month lead time and service level of 90%).
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  • Safety Stock and Reorder Point

    Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00
    K-12002100,000300$2.00

  • Safety Stock and Reorder Point

    Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00
    K-12002100,000300$2.00

  • Operations Mgmt W2:A2ii

    Safety Stock and Reorder Point

    Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00

  • Safety Stock and Reorder Point

    Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00
    K-12002100,000300$2.00

  • Safety Stock and Reorder Point

    Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00
    K-12002100,000300$2.00

  • Safety Stock and Reorder Point

    Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00
    K-12002100,000300$2.00

  • Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00
    K-12002100,000300$2.00
    L-13003250,000200$0.20
    N-14004

  • Safety Stock and Reorder Point

    Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00
    K-12002100,000300$2.00

  • Safety Stock and Reorder Point

    Consider the following data.

    Inventory ItemAverage Demand (Annual)Sigma (Std. Dev.) of Demand During Lead TimeItem Unit Cost
    F-1100115,000100$250.00
    K-12002100,000300$2.00