Question: ABC warehouse is open 5 days per week. It uses an average of 55 pallets for shipping appliances each week. The operations manager, Sam, is

ABC warehouse is open 5 days per week. It uses an

ABC warehouse is open 5 days per week. It uses an average of 55 pallets for shipping appliances each week. The operations manager, Sam, is working on an inventory control model in order to determine the proper ordering of these shipping pallets. The weekly demand for these pallets is variable, and follows a normal distribution, with a mean of 55 and a standard deviation of 7 pallets. The lead time to get the pallets from the supplier is 10 days. a) If a continuous review model (Q-model) is used, and Sam is willing to accept no more than a 9 percent risk of stock-out during the lead time, what should be the pallet reorder point and the safety stock to achieve the desired service level? b) Let us assume that a continuous review model is not possible but rather a periodic review model is more suitable Sam determines that the warehouse pallet inventory should be reviewed every 30 days, and an order should be placed according to the inventory level at that point. If Sam would like to achieve a cycle service level of 96%. What should be the order-up-to level? How much safety stock would the warehouse have to carry? ii. If at one of the reviews the warehouse has 80 pallets in stock, what should be the order quantity under this model

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