A Store Has Collected the Following Information on One of Its

question 133

Essay

A store has collected the following information on one of its products:
Demand = 4500 units/year
Standard deviation of weekly demand = 12 units
Ordering costs = $40/order
Holding costs = $3/unit/year
Cycle-service level = 90% (z for 90% = 1.28)
Lead time = 2 weeks
Number of weeks per year = 52 weeks
a.If a firm uses the continuous review system to control the inventory,what would be the order quantity and reorder point?
b.The firm decided to change to the periodic review system to control the item's inventory.For the most recent review,an inventory clerk checked the inventory of this item and found 300 units.There were no scheduled receipts at the time.How many units should be ordered? (HINT: Use the EOQ model to derive P,the time between reviews.)

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Definitions:

Job Rotation

A variation of job enlargement in which workers are exposed to a variety of specialized jobs over time.

Herzberg's Two-Factor Theory

A theory proposing that job satisfaction and dissatisfaction arise from two distinct sets of factors—motivators (e.g., achievements) and hygiene factors (e.g., salary).

Job Enrichment

The process of designing jobs to incorporate higher levels of motivating factors, including opportunities for achievement, recognition, responsibility, and personal growth.

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, organized in a five-tier model of human needs, from basic physiological needs to self-actualization.