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ACME has been having inventory management problems with one of their major components. They have been relying on the experience of their purchasing commodity manager
ACME has been having inventory management problems with one of their major components. They have been relying on the experience of their purchasing commodity manager to manage the inventory. The Senior Vice President has decided to implement a simple "Q, R "system based on a Continuous Review Policy. The Average demand per week is 90 units with a standard deviation of 30 units, and it takes 16 weeks from order to replenishment from the supplier. The Senior Vice President wants a Service level of 98% for this component - in other words, she is willing to accept stockouts for only 2% of the time. The relevant z-table information is given below: In the above situation, ACME's Senior Vice President also wants to know what the new Safety Stock level would be if she decreased the Service Level to 96\%. What would be the new Safety Stock in this case? (if appropriate, round it to the next highest round number 149 276 315 185 210
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