Solution-Manager current inventory policy

Manager current inventory policy

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Reference no: EM133430351

The manager at SaskTires, a distributor of tires in Saskatchewan, uses a continuous review policy to manage inventory. The manager currently orders 10,000 tires when the inventory of tires drops to 6,000. Weekly demand for tires is normally distributed, with a mean of 2,000 and a standard deviation of 500. The replenishment lead time for tires is two weeks. Each tire costs SaskTires $40, and the company sells each tire for $80. SaskTires incurs an annual holding cost of 25 percent.

1. How much safety inventory does SaskTires currently carry?

2. What is the cycle service level under the manager's current inventory policy?

3. What is the expected understock under the manager's current inventory policy?

4. What is the expected overstock under the manager's current inventory policy?

5. What is the optimal cycle service level based on the given information?

6. What is the optimal safety inventory level based on the given information?

Reference no: EM133430351

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Manager current inventory policy

Reference no: EM133430351

Reference no: EM133430351

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