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BlueD is an online retailer for high-quality game audio equipment. Recently, customers around the Chicago area have increasing complaints about the delays in receiving the
BlueD is an online retailer for high-quality game audio equipment. Recently, customers around the Chicago area have increasing complaints about the delays in receiving the orders of the Snowball USB microphone, a popular item. BlueD collected 40 weeks of past demands and would like improve the stocking policy for the distribution center located at suburb Chicago. The demand data is given in the following table. BlueD believes that the weekly customer demand is stable and is about normally distributed. The inventory record is reviewed on a weekly basis. A purchasing order is issued every Tuesday and the manufacturer delivers on the Tuesday three weeks later. The purchasing price is $115 with the shipping cost paid by the manufacturer. The online selling price is $199. The average storage cost for each microphone is $1.5. When stockout happens, BlueD provides the each customer a $10 voucher for store credit for every week of delay in fulfilling the customer order. Not all customers end up using the voucher. The past experience suggests that about 72% of the issued vouchers are redeemed. The capital cost for the company is 0.5% per week. Note that the cash for invoice payment is reserved immediately upon placing the order. Q1 What is the optimal OUT level? (Rounded to whole number) Q2 Suppose that BlueD decided to maintain a (type I) service level of 75%, what is the corresponding OUT level? Historical Inventory Data Week Demand 1 573 2 548 3 497 4 548 5 381 6 635 7 520 8 449 9 562 10 585 11 448 12 768 13 226 14 607 15 681 16 507 17 385 18 513 19 659 20 244 21 403 22 485 23 500 24 304 25 242 26 538 27 573 28 393 29 563 30 392 31 566 32 701 33 587 34 380 35 528 36 296 37 399 38 531 39 582 40 538
BlueD is an online retailer for high-quality game audio equipment. Recently, customers around the Chicago area have increasing complaints about the delays in receiving the orders of the Snowball USB microphone, a popular item. BlueD collected 40 weeks of past demands and would like improve the stocking policy for the distribution center located at suburb Chicago. The demand data is given in the following table. BlueD believes that the weekly customer demand is stable and is about normally distributed. | |
The inventory record is reviewed on a weekly basis. A purchasing order is issued every Tuesday and the manufacturer delivers on the Tuesday three weeks later. The purchasing price is $115 with the shipping cost paid by the manufacturer. The online selling price is $199. The average storage cost for each microphone is $1.5. When stockout happens, BlueD provides the each customer a $10 voucher for store credit for every week of delay in fulfilling the customer order. Not all customers end up using the voucher. The past experience suggests that about 72% of the issued vouchers are redeemed. The capital cost for the company is 0.5% per week. Note that the cash for invoice payment is reserved immediately upon placing the order. | |
Q1 What is the optimal OUT level? (Rounded to whole number) | |
Q2 Suppose that BlueD decided to maintain a (type I) service level of 75%, what is the corresponding OUT level? | |
Historical Inventory Data | |
Week | Demand |
1 | 573 |
2 | 548 |
3 | 497 |
4 | 548 |
5 | 381 |
6 | 635 |
7 | 520 |
8 | 449 |
9 | 562 |
10 | 585 |
11 | 448 |
12 | 768 |
13 | 226 |
14 | 607 |
15 | 681 |
16 | 507 |
17 | 385 |
18 | 513 |
19 | 659 |
20 | 244 |
21 | 403 |
22 | 485 |
23 | 500 |
24 | 304 |
25 | 242 |
26 | 538 |
27 | 573 |
28 | 393 |
29 | 563 |
30 | 392 |
31 | 566 |
32 | 701 |
33 | 587 |
34 | 380 |
35 | 528 |
36 | 296 |
37 | 399 |
38 | 531 |
39 | 582 |
40 | 538 |
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