Question: Average daily demand 3 2 5 cases per day Standard deviation of daily demand 9 5 cases per day Average Lead Time 2 days (

Average daily demand 325 cases per day
Standard deviation of daily demand 95 cases per day
Average Lead Time 2 days (constant)
Inventory holding cost 20% of the item's value per year
Purchase Price $50 per case
Order Cost $10 per order
Stockout Cost $35 per case
Desired Service Level 80%
Assume the company operates 365 days per year
What should the level of safety stock be for this item to meet the desired service level assuming lead time is always 2 days and the z-score for a service level of 80% is 0.84?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!