Question
Dunstreets Department Store would like to develop a fixed-period inventory ordering structure for its white percale sheets. The store has established a policy of satisfying
Dunstreets Department Store would like to develop a fixed-period inventory ordering structure for its white percale sheets. The store has established a policy of satisfying 95 percent of demand from items in stock. The demand for white percale sheets is 5,000 annually. The store is open 365 days per year. Holding cost equals to $1.80 per sheet per year. Each order to its distributor costs the store $20 per order. It always takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is 5 per day. Find out:
a) Order review interval (i.e. the time in-between inventory positionings)
b) Safety stock quantity (i.e. the extra quantity Dunstreet's would like to carry to protect it from stock out)
c) Replenishment level (i.e. order up to level or the quantity that Dunsteet's should bring its inventory level to)
d) If at one of the inventory positioning points, the manager finds out that 120 sheets are still left in stock, how many additional sheets should be ordered?
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