Weekly demand for handbags at Liverpool, a Mexican department store chain, is normally distributed with a mean
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Question:
Weekly demand for handbags at Liverpool, a Mexican department store chain, is normally distributed with a mean of 3,000 and a standard deviation of 1,000. The replenishment lead time for the supplier is 4 weeks. Liverpool uses a continuous review policy. It currently uses a reorder point of 14,810, at which it places a replenishment order for 20,500 handbags.
a) What is the average order size?
b) How much safety inventory of handbags does Liverpool carry? What CSL does it achieve?
c) What reorder point should it use if it wants a CSL of 99 percent?
d) Graph how the continuous review policy would look like using CSL of 99 percent.
Related Book For
Managing Business Process Flows Principles of Operations Management
ISBN: 978-0136036371
3rd edition
Authors: Ravi Anupindi, Sunil Chopra, Sudhakar Deshmukh, Jan Van Mieg
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