question archive A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region
A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region
Subject:Operations ManagementPrice:2.86 Bought6
A regional distributor purchases discontinued appliances from various suppliers and then sells them on demand to retailers in the region. The distributor operates 5 days per week, 52 weeks per year. Only when it is open for business can orders be received. The following data re estimated for the mixer:
- Average daily demand = 90 mixers
- Standard deviation of daily demand = 25 mixers
- Lead time (L) = 9 days
- Inventory review period (P) = 4 days
- Cycle-service level = 98% (Z = 2.054)
- The distributor uses a periodic review system (P)
What is the target inventory level (T) ? (Round to 1 decimal)
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Economic order quantity refers to quantity that should be ordered by the company that will minimize the total cost of managing the inventory.
The policy that must be followed in order to keep the operation optimal is continuous inventory system. In this system the inventory data is updated continuously. Continuous inventory focus on tracking the quantities constantly as as soon as it reaches the reorder point, economic order quantity is ordered.
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