Question: This inventory case study illustrates the relationship between demand variability and safety stock in a periodic review setting. The company faces uncertain demand but reviews
This inventory case study illustrates the relationship between demand variability and safety stock in a periodic review setting. The company faces uncertain demand but reviews inventory every four weeks. Since demand is variable, it must hold enough safety stock to maintain a95% service level. This case guides learners through calculating the average demand during the review and lead time, and how to compute additional units as safety stock using statistical methods. Students then determine the order-up-to level and the annual cost of placing orders. By analyzing ordering intervals instead of continuous monitoring, this model simplifies operations for companies with supplier limitations. The scenario enhances understanding of protection period planning and introduces variability into basic EOQ-style inventory models.4
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