Timbuk2 Inc. manufactures over 100,000 different versions of messenger bags. Suppose Timbuk2 implements an order-up-to model to manage its inventory of a particular plastic buckle. Timbuk2 places an order every week and the lead time to receive these buckles is three weeks. Demand is approximately normally distributed with a mean of 2300 units per week and a standard deviation of 1300. Each week’s demand is independent of the demand in the other weeks.

1. What is the order-up-to level (target inventory position) that achieves a target in-stock probability of 99.6%?
2. What is the fill rate that corresponds to a target service level of 98%?

Answer rating: 100% (QA)

a Mean weekly demand 2300 Stdev of weekly demand 13... View the full answer