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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 XRModel XRi 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
The inventory level of Model XRi 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 XRi Sound Blasters from Kreative Hub at Changi.When the FGI Controller places an order for XRi models, the manufacturing system delivers the requested quantity of Model XRi Sound Blasters to the FGI after days. Assume the daily demand for Model XRi Sound Blasters at the FGI from the Kreative
Hub at Changi is stable and normally distributed with a mean of and standard deviation of Assume Kreative factory, FGI and the Kreative Hub at Changi work days per week throughout the year.
Due to rising inventory levels and frequent stockouts, 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 service level provided to the Kreative Hub at Changi using the inventory policy currently used by FGI.
c Wendy wanted to know the expected stockouts of the FGI to the Kreative Hub at Changi. Compute the average number of stockouts 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 XRi Sound Blasters at the FGI using their current method?
e Wendy recommended the FGI Controller to use continuous review QR Policy to control the inventory with reorder quantity equal to that of the economic order quantity EOQ Assume the order cost including factory setup is $ per order placed and holding cost per week is $ 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 service level of for Model XRi Sound Blasters. What is the reorder level in order to provide such service? How many stockouts Wendy may expect per year under this new policy?
g What will be the expected average inventory of the Model XRi Sound Blasters in the FGI when they use inventory control policy proposed by Wendy?
h Assuming the Model XRi Sound Blasters is a highend consumer item, which policy should Wendy recommend and state why?
Please show full working for all parts.
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