Answered: A firm uses a one-week periodic review…

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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A firm uses a one-week periodic review inventory system. A two-day lead time is needed for any order, and the firm is willing to tolerate an average of one stock-out per year.
a. Using the firm’s service guideline, what is the probability of a stock-out associated with each replenishment decision?
b. What is the replenishment level if demand during the review period plus lead-time period is normally distributed with a mean of 60 units and a standard deviation of 12 units?
c. What is the replenishment level if demand during the review period plus lead-time period is uniformly distributed between 35 and 85 units?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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