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Wendy was recruited by Kreative Pte Ltd at the Jurong plant as an Operations Manager after her Mechanical Engineering degree from NTU. Kreative Pte Ltd

Wendy was recruited by Kreative Pte Ltd at the Jurong plant as an Operations Manager after her Mechanical Engineering degree from NTU. Kreative Pte Ltd manufactures a large number of Sound Blasters at its manufacturing plant in Jurong, and one of the popular models is XR3.Model XR3i Sound Blasters are manufactured, assembled and shipped to Kreative Hub at Changi, through a Finished Goods Inventory (FGI)
kept at the end of the assembly line in Jurong as shown in Figure 1.
The inventory level of Model XR3i Sound Blasters in FGI at the end of Manufacturing line is controlled by periodic review Base Stock policy with one week review period. Base Stock level B in the FGI is set at twice that of the average weekly demand of Model XR3i Sound Blasters from Kreative Hub at Changi.When the FGI Controller places an order for XR3i models, the manufacturing system delivers the requested quantity of Model XR3i Sound Blasters to the FGI after 5 days. Assume the daily demand for Model XR3i Sound Blasters at the FGI from the Kreative
Hub at Changi is stable and normally distributed with a mean of 20 and standard deviation of 6. Assume Kreative factory, FGI and the Kreative Hub at Changi work 7 days per week throughout the year.
Due to rising inventory levels and frequent stock-outs, the Operations Director assigned Wendy to evaluate possible strategies to control the inventory level in FGI in order to achieve better service levels and make a recommendation to the senior management. Wendy decided to apply the concepts she learnt in her final year course to analyze the service level offered by the manufacturing system to the Kreative Hub
at Changi and compute the expected average level of inventory at the FGI before making any presentation and recommendation. SThe company, people, data, and events depicted herein are entirely fictitious. Any resemblance to actual people, businesses or situations is purely coincidental.}
(b) Wendy wanted to identify the service level currently offered by the FGI to the Kreative Hub at Changi. Compute the service level in terms of the coverage probability (Type 1 service level) provided to the Kreative Hub at Changi using the inventory policy currently used by FGI.
(c) Wendy wanted to know the expected stock-outs of the FGI to the Kreative Hub at Changi. Compute the average number of stock-outs the Kreative Hub at Changi may expect per year from FGI using their current method?
(d) What is the expected average inventory level of the Model XR3i Sound Blasters at the FGI using their current method?
(e) Wendy recommended the FGI Controller to use continuous review Q-R Policy to control the inventory with re-order quantity equal to that of the economic order quantity (EOQ). Assume the order cost (including factory setup) is $40 per order placed and holding cost per week is $1.12 per unit. What will be Wendy's order quantity based on her revised policy recommended?
(f) Assume that Wendy requires to provide a coverage probability (Type 1 service level) of 99% for Model XR3i Sound Blasters. What is the re-order level in order to provide such service? How many stock-outs Wendy may expect per year under this new policy?
(g) What will be the expected average inventory of the Model XR3i Sound Blasters in the FGI when they use inventory control policy proposed by Wendy?
(h) Assuming the Model XR3i Sound Blasters is a high-end consumer item, which policy should Wendy recommend and state why?
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