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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?


Definitions:

Diatoms

A major group of algae, specifically microalgae, characterized by their unique cell walls composed of silica.

Unicellular Alga

A single-celled microorganism in the algae family, which conducts photosynthesis and lives in aquatic environments.

Whirls

Circular or spiraling patterns or movements.

Euglenoid

Refers to single-celled organisms within the kingdom Protista, characterized by their ability to be both autotrophic and heterotrophic.

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