QUESTION 25 (10 points) - Fixed-Period Inventory Systems (FPS) A corner store carries milk jugs with current and average information presented in the table below. The store follows a fixed-period inventory system (FPS) to manage its carriage of milk jugs. The corner store is open 52 weeks per year and 7 days per week. Because milk is perishable, holding a jug for a month costs 70% of the item cost, or 840% per year. Average demand 32 jugs per week Lead time 3 days Order cost $15 per order Unit cost $1.6 for a jug Annual inventory holding cost 840% for a year Standard deviation of weekly demand 6 jugs per week Desired service level with safety stock 85% Current on-hand inventory 23 jugs Current scheduled receipts 0 iugs Current backorders O jugs Weeks of operation 52 weeks Days of operation 7 days in a week You would need to show equations, steps, and the final results with units for full credits. Time intervals and goods quantities are rounded up to whole numbers. You should work with a time unit of days, find average daily demand and standard deviation of daily demand, and scale up those daily measures to find necessary values. (a)[2] Find the Economic Order Quantity (EOQ). (Rounded up to a whole number) (b)(1) Based on part (a), find the time interval between reviews T in days. (Rounded up) (c)[1] Find the current inventory position (IP). (d)(3) Given that no safety stock is considered, find the replenishment level M(AD). Explain how this inventory system would operate. If today is the review day, what is the order quantity? Loosely sketch how the system would operate over time (movement of IP over time). (e)[3] Given that the corner store carries safety stock and aims for the desired service level, find the replenishment level M(ST). Explain how this inventory system would operate. If today is the review day, what is the order quantity? Loosely sketch how the system would operate over time (movement of IP over time). Hint: Use the following table to find the z-value corresponding to the desired service level. 0.80 0.85 0.90 0.95 0.99 | z = NORM.S.INV(av) 0.84162 1.03643 1.28155 1.64485 2 .32635 Oy QUESTION 25 (10 points) - Fixed-Period Inventory Systems (FPS) A corner store carries milk jugs with current and average information presented in the table below. The store follows a fixed-period inventory system (FPS) to manage its carriage of milk jugs. The corner store is open 52 weeks per year and 7 days per week. Because milk is perishable, holding a jug for a month costs 70% of the item cost, or 840% per year. Average demand 32 jugs per week Lead time 3 days Order cost $15 per order Unit cost $1.6 for a jug Annual inventory holding cost 840% for a year Standard deviation of weekly demand 6 jugs per week Desired service level with safety stock 85% Current on-hand inventory 23 jugs Current scheduled receipts 0 iugs Current backorders O jugs Weeks of operation 52 weeks Days of operation 7 days in a week You would need to show equations, steps, and the final results with units for full credits. Time intervals and goods quantities are rounded up to whole numbers. You should work with a time unit of days, find average daily demand and standard deviation of daily demand, and scale up those daily measures to find necessary values. (a)[2] Find the Economic Order Quantity (EOQ). (Rounded up to a whole number) (b)(1) Based on part (a), find the time interval between reviews T in days. (Rounded up) (c)[1] Find the current inventory position (IP). (d)(3) Given that no safety stock is considered, find the replenishment level M(AD). Explain how this inventory system would operate. If today is the review day, what is the order quantity? Loosely sketch how the system would operate over time (movement of IP over time). (e)[3] Given that the corner store carries safety stock and aims for the desired service level, find the replenishment level M(ST). Explain how this inventory system would operate. If today is the review day, what is the order quantity? Loosely sketch how the system would operate over time (movement of IP over time). Hint: Use the following table to find the z-value corresponding to the desired service level. 0.80 0.85 0.90 0.95 0.99 | z = NORM.S.INV(av) 0.84162 1.03643 1.28155 1.64485 2 .32635 Oy
