Question: 4. Mabt, the retailer in Problem 2, has 10 stores in Chicago area. One of their product is Oven-SX, which is a gas oven that
4. Mabt, the retailer in Problem 2, has 10 stores in Chicago area. One of their product is Oven-SX, which is a gas oven that is ordered from a manufacturer in Los Angeles. Each store faces similar demand and has been ordering the oven according to a (Q, R) policy to achieve cycle-service level of 95 percent. Due to low demand in each store, Mabt is planning to hold inventory of the oven only in 1 of the 10 storesthe store in downtown. The store in downtown is larger than other stores and can hold more inventory. It is also close to other nine stores. The idea is to keep only one oven in the other nine stores for display. When a customer orders the oven, the oven will be shipped from the store in downtown. To keep the availability the same, the plan is to keep the cycle-service level for the oven in downtown store at 95 percent. If this plan is implemented, explain why each of the following statements is true or false.
a. The safety stock of the oven in the downtown store would be smaller than the safety stock in each stores before the plan is implemented.
b. The safety stock of the oven in the downtown store would be smaller than the total safety stock of the 10 stores before the plan is implemented, but the chance of stockout would be larger in the store in downtown than that of the 10 stores before the plant is implemented.
c. The inventory turn of the oven in the downtown store would be larger than that before the plan is implemented.
d. More information is needed to make any conclusion.
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
