A Product Has Variable Demand and Constant Lead Time

question 11

Essay

A product has variable demand and constant lead time. Currently this product is managed by a fixed-period inventory system, for which the review period is one week. Lead time is four weeks. Annually about 5,200 units of this product are sold. The current target inventory is 500 units. Today is review day; 75 units are on the shelves, and orders placed at previous reviews in the amount of 110, 60, and 30 have not yet been received. There are no backorders.
a. How much is the firm allowing for safety stock in this case?
b. What should be the order amount this week?

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Definitions:

Peer Demands

The expectations and pressures exerted by one's peers to conform to their norms, behaviors, or attitudes.

Gender Schema

A cognitive framework that organizes information based on gender-related associations and stereotypes.

Organizational Plan

A structured outline detailing how a company or project intends to achieve its goals and objectives.

Male

The biological sex characterized by the XY chromosome pair, typically associated with male reproductive structures and secondary sexual characteristics.