Design a periodic review system for this part

Assignment Help Operation Management

Reference no: EM13227044

This is a 2 part question because I cannot split it apart:

Part 1:

Suppose that an auto part in a manufacturer's inventory has the following characteristics:

Forecast of demand	1,250 cases per week
Forecast error, std. dev.	475 cases per week
Lead Time	2.5 weeks
Carrying Cost	30% per year
Purchase Price, delivered	$56 per case
Replenishment Order Cost	$40 per order
Stockout Cost	$10 per case
Probability of being in stock during the lead time, P	80%

Design a reorder point control system for this part, given the assigned P. How would you state the inventory control policy if the ROP > Q*?
Design a periodic review system for this part. Now assume that the probability of being in stock extends to the order interval plus lead time.

Part 2:

Repeat question above, but include that the lead time is normally distributed with a standard deviation of 0.5 weeks.

Reference no: EM13227044

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