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1. Under which conditions would a plant manager elect to use a fixed-order quantity model as opposed to a fixed-time period model? Daily demand for
1. Under which conditions would a plant manager elect to use a fixed-order quantity model as opposed to a fixed-time period model?
Daily demand for a product is 10 units, with a standard deviation of 3 units. The review period is 30 days, and the lead time is 14 days. Management has set a policy of satisfying 98 percent of demand from items in stock. At the beginning of this review period, there are 150 units in inventory. How many units should be ordered?
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