Question
The DoorRed pharmacy has 25 retail outlets in the Chicago region. The current policy is to carry every drug in each retail outlet. The replenishment
The DoorRed pharmacy has 25 retail outlets in the Chicago region. The current policy is to carry every drug in each retail outlet. The replenishment lead time is 10 days. DoorRed aims for a cycle service level of 95%. Consider a drug with daily demand that is normally distributed with mean of 200 and standard deviation of 50. (a) What is the total safety stock across all retail stores? (b) If the drug were centralized in one location, what would the safety stock at the central location be? (c) The drug costs $10 per unit and DoorRed uses an annual inventory holding cost of 20%. What would be the savings in holding safety stock by using one location?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started