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Inventory Control Model Problem

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A company has decided to order 360 units whenever the on-hand inventory falls to 100 units. There appears to be no seasonal fluctuation to the demand, but it does fluctuate daily and is approximately normally distributed. Historically, the lead time has been four days, and the average sales during this four day period are 80 units with a standard deviation of 10 units. There are 250 working days per year. How much safety stock is the company carrying? What service level is implied by this policy?

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Solution Summary

This tutorial gives insturctional aid on how to calculate safety stock and service levels.

Solution Preview

Q 360 Units
ROP 100 Units
Lead time 4 Days
DDLT 80 units
Std ...

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