Solution-Find the safety inventory for the speakers

Find the safety inventory for the speakers

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Reference no: EM133071369

Question - Samsung sells stereos and uses a continuous review system. The historical weekly demand for a smart speaker indicates that it has a normal distribution with mean 210 and standard deviation of 34.

It takes about two weeks for an order to arrive, once an order is placed. The store pays $ 300 for aunit and it costs $ 120 to place the order.

Samsung places a high value on customer satisfaction and considers goodwill to be crucial as they estimate that the loss of this costs $ 1.6 / speaker and has a penalty for late delivery of $1.3/speaker-week. Stocks can be backordered and the annual cost of holding inventory is 16%.93% fill rate required.

Required -

a) Find the reorder point ROP. Consider Q = 234 units.

b) Find the safety inventory for the speakers.

c) Find the expected annual cost of the continuous review policy.

d) Find the expected number of missing speakers per year.

e) Find the cost of shortages per year.

Reference no: EM133071369

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Find the safety inventory for the speakers

Reference no: EM133071369

Reference no: EM133071369

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