Problem 13-31 A drugstore uses fixed-order cycles for many of the items it stock
ID: 460618 • Letter: P
Question
Problem 13-31
A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service level of .98. The order interval is 13 days, and lead time is 3 days. Average demand for one item is 64 units per day, and the standard deviation of demand is 9 units per day. Given the on-hand inventory at the reorder time for each order cycle shown in the following table.
Determine the order quantities for cycles 1, 2, and 3: (Round your answers to the nearest whole number)
A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a service level of .98. The order interval is 13 days, and lead time is 3 days. Average demand for one item is 64 units per day, and the standard deviation of demand is 9 units per day. Given the on-hand inventory at the reorder time for each order cycle shown in the following table.
Use Table.Explanation / Answer
Order quantities for cycles 1,2 and 3 are as below
Cycle 1 = 1060
Cycle 2 = 1090
Cycle 3 = 998
Daily Demand µD 64 SD of Daily Demand D 9 Review Period 13 days Lead Time (L) 3 days Service level 98% Z-value 2.05 Safety stock (ss) 74 ss = ZD(L+R) On-Hand Inventory (OH) 38 Order Quantity 1060 Q = µD*(L+R) + ss - OH