Consider a periodic review system, where orders are placed every 14 days. the firm strives to provide a 96.5% cycle service level. demand averages 400 units per day, and the standard deviation of demand per day is 84 units. lead time is 10 days.
a. how many units of safety stock should be held?
b. what should the target inventory level (order-up-to level) be?
c. suppose that it is time to review the item. there are 170 units in inventory, and there is an outstanding backorder for 300 units. an order for 88 units is on the way. how many units should be ordered now?
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Answer:
The sailor accepts this bargain, so the captain offers him the chain. The sailor refuses, saying that he did not want to be indebted to anyone, even for a night. The captain then offers to pay him at the end of the voyage, but again the sailor refuses, saying that he also does not like owing anyone anything, even for a night. Captain Jack tells him that he is willing to break the chains and pay him one link a day. The sailor again refuses, stating that the links would lose value if they were broken, but tells Captain Swallow that he is willing to accept the chain if only one link is cut. Captain Jack considers these terms for a while and then agrees to the conditions that the sailor has given him.
In how many parts should Captain jack cut the chain to make payment to the sailor if only minimum cut filling required conditions are to be done?