Most cost effective competitive customer service levels

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Reference no: EM132238668

Managers at a consumer product company, ABC General, are currently debating how to Set the most cost effective competitive customer service levels for a new brand ELSKIMOS. The Accounting manager has suggested 5 days of sales as safety stock. The Marketing manager has argued for 15 days, while the operations/manufacturing manager Seeks a compromise level of 10 days. The General Manager wants your specific Recommendation with justification and supporting quantitative analysis.

Here are some relevant information about EL-SKIMOS to help you in your analysis:

Average daily demand during lead time =15 units /day

Standard deviation of daily demand = 2 units

Average replenishment time ?=7 days

Standard deviation of replenishment time = 3 days

Typical order quantity?= 100 units

1. What is your analysis of the inventory system at ABC. Include your estimates for average inventory, safety stock and reorder point)?

2. What are your specific recommendations regarding the inventory systems at ABC?

Reference no: EM132238668

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