Question: A retail store carries a modern white kitchen ceiling lamp that is quite popular and they want to achieve a cycle service level of 96%.

A retail store carries a modern white kitchen ceiling lamp that is quite popular and they want to achieve a cycle service level of 96%. The order lead time is 6 weeks and the store uses a Q system to manage the item. Every time the store orders 1000 units. The anticipated demand during lead-time can be approximated by a Normal distribution curve with a mean of 600 units and a standard deviation of 500 units. The average demand is estimated to be 100 units per week throughout the year. Answer the following questions with regard to this SKU.

How much safety stock should the store carry for this SKU?

What is their reorder point (ROP) for this SKU?

How much cycle inventory is the store carrying for this SKU?

How much transportation inventory does the store carry for this SKU?

What is the total inventory (in units) for this item? (be sure to include all inventory components mentioned here)

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