Question: An improved ordering and delivery system helps reduce the lead time from 2 weeks to 1.5 weeks and allows Best Buy to order in smaller
An improved ordering and delivery system helps reduce the lead time from 2 weeks to 1.5 weeks and allows Best Buy to order in smaller batch sizes such that its order size now is 10 units. What will be the total % reduction in cycle+safety+pipeline stocks?
Given:
| mean demand per period= | 5 | ||
| std.dev. of demand per period= | 1.5 | ||
| mean leadtime in periods= | 2 | ||
| std.dev. of leadtime in periods= | 0 | ||
| desired service level alpha= | 0.95 | ||
| Order Size= | 20 | ||
| mean leadtime demand (DDLT)= | 10 | ||
| std.dev. leadtime demand (DDLT)= | 2.12132 | ||
| Order Size Q= | 69 | ||
| Reorder Point R= | 13.48926 | ||
| Cycle Stock= | 10 | ||
| Safety Stock= | 3.489261 | ||
| Pipeline Stock= | 10 |
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