Cycle-service level for all stock items

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Reference no: EM131711999

A firm advertise a 90 per cent cycle-service level for all stock items. Stock is replenished from a single supplier who guarantees a lead-time of 4 weeks. The weekly demand for one of the items follows the Normal distribution with mean of 2,000 units and standard deviation of 200 units. As the company’s buyer, you have the necessary information to determine the reorder level.

Sales Director suggested to use 95% cycle-service level to minimise out of stock situation while the Accounts Director suggested to use a bi-weekly periodic review method. Analyse the existing reorder level and compare it with the suggestions proposed by the directors.

Can guide through with Reordering level forumlate and target stock level forumlate?

Reference no: EM131711999

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