WB has been unable to adequately hold inventory to satisfy the production needs. The following demand probability distribution has been created to try and understand production demand and therefore support management to order enough batteries to avoid stockouts.

Demand per week	Probability		Lead time (weeks)	Probability
200	0.05		1	0.30
240	0.10		2	0.50
260	0.60		3	0.20
280	0.15
300	0.10

WB currently re-orders batteries when inventory reaches 160 batteries and orders batteries from suppliers in quantities of 400 units.

Required:

1) Simulate a 20-week scenario for WB assuming that there are currently 600 batteries in inventory. Calculate the total lost sales and average lead time after the 20-week simulation. 

2) Create a second simulation and recommend what changes need to occur to the re-order point and quantity to improve the outcome.

 

Answer rating: 100% (QA)

ANSWER 1 Week Demand Inventory Order Lead Time Weeks 1 180 600 Yes 1 2 200 780 No 0 3 2... View the full answer