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Consider a periodic review system, where orders are placed every 12 days. The firm strives to provide a 97.5% cycle service level. Demand averages 300 units per day, and the standard deviation of demand per day is 64 units. Lead time is 18 days.
1. Suppose that it is time to review the item. There are 170 units in inventory, and there is an outstanding backorder for 300 units. An order for 188 units is on the way. How many units should be ordered now?
Quality in lean systems is based on kaizen, the Japanese term for change for the good of all or continuous improvement. Safety stock is the level of inventory at which a new order should be placed. Production control is the last stage of planning bef..
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