What Is the Target Inventory If Frank's Dairy Inventory Review

question 10

Short Answer

What is the target inventory if Frank's dairy inventory review is every 7 days and they consume an average of 15 cases of milk cartons every day? Frank's new milk carton supplier says they can deliver an order every 5 days. While Frank's material coordinator says they should order 45 cases at a time, what is their target inventory level if they do not want to maintain a safety stock?

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Definitions:

Income Elasticity

A measure of how much the demand for a product changes in response to a change in consumers' income.

Demand

The total quantity of a good or service that consumers are willing and able to purchase at a given price level in a given market.

Health Care

The preservation or enhancement of well-being through the avoidance, identification, management, recuperation, or healing of diseases, ailments, injuries, and other physical and mental conditions in individuals.

Price Elasticity

A measure of the sensitivity of the quantity demanded or supplied of a good to a change in its price.