What is the expected on - order inventory

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Reference no: EM133614149

Case: Suppose you are the owner of Hotspices.com, an online retailer of hip, exotic, and hard - to - find spices. Consider your inventory of saffron, a spice (generally) worth more by weight than gold. You order saffron from an overseas supplier with a shipping lead time of four weeks and you order weekly. Average monthly demand is normally distributed with a mean of 300 ounces and a standard deviation of 104 ounces. Assume there are 4 weeks in a month. Suppose you want a 92% target in - stock probability. What should your order - up - to level be ? Consider your calculation of the base stock in problem 1. When the firm reviews its inventory it finds that it has 200 ounces on - hand inventory and 50 ounces on - order. How many ounces should you order? Suppose you use an order - up - to - level of 381 ounces. What is your in - stock probability? Suppose you use an order - up - to - level of 381 ounces. How many will be the expected backorders? Suppose you use an order - up - to - level of 275 ounces. What is the expected on - order inventory? Suppose you use an order - up - to - level of 275 ounces. How many will be the expected backorders per cvcle?

Reference no: EM133614149

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