Question: 11.15 Management has stated that it will tolerate one stockout per year. The forecast of annual demand for a particular SKU is 100,000 units, and

11.15 Management has stated that it will tolerate

11.15 Management has stated that it will tolerate one stockout per year. The forecast of annual demand for a particular SKU is 100,000 units, and it is ordered in quantities of 10,000 units. The lead time is 2 weeks. Sales history for the past 10 weeks follows. Calculate: a. Sigma for the history time interval. b. Sigma for the lead time interval. c. The service level. d. The safety stock required for this service level. e. The order point. Week Actual Demand Deviation Deviation Squared 1 2100 2 1700 3 2600 4 1400 5 1800 6 2300 7 2200 8 1600 9 2100 10 2200 Total If in problem 11.15, management said that it is considering increasing the service level to one stockout every 2 years, what would the new safety stock be? If the cost of carrying inventory on this item is $10 per unit per year, what is the cost of increasing the inventory from one stockout per year to one every 2 years

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