What would the average replenishment order quantity

Assignment Help Operation Management
Reference no: EM132307063

Wooden Stuff is a furniture retailer operating in Cambridge, Boston. It mainly commercializes wooden desks in various sizes and shapes, and they have become very popular among MIT and Harvard students that need to furnish their rental apartments. To date, they have been managing their inventory with a simple Base Stock Policy: one item sold, one item ordered. This has worked well for a few years, but now they would like to switch to a more sophisticated policy.

Their flagship product is SKU 9560EV, the Lifting Table, a table that can be adjusted to different heights to allow working in seated or standing position. This product accounts for one third of their sales and they would like to ensure a Cycle Service Level of 95% for this item.

You have been asked to analyze this item and propose an inventory management policy that fits the company’s needs. After doing a little bit of research, you have estimated that the annual holding charge for the Lifting Table is 25%. The demand planner has given you some interesting data: the demand for the Lifting Table follows a normal distribution with a mean of 1606 units per year and a standard deviation of 188 units.

The purchasing department informs you that the cost of each desk is $120 and the estimated ordering costs are $100 per order. It usually takes 10 days for the ordered items to arrive to the Wooden Stuff facilities. Every Lifting Table is sold at a price of $300. (Assume that there are 365 days in one year, and 30 days in a month.)

After analyzing all the available information and interviewing some key stakeholders in the company, you have decided to explore a Continuous Review Policy (s, Q).

What would be the replenishment order quantity EOQ?

What would be the reorder point s ?

If this policy was to be implemented, what would be the Item Fill Rate?

Based on market research and historical data, the Wooden Stuff financial manager has estimated that the cost per stockout event is $323. He thinks the policies you proposed might be allowing too many stockout events to happen.By focusing on this metric, what would be the new value of the safety factor k?

Is it true that the policy proposed in Part 1 allows for more stockout events than a policy that uses the safety factor you just calculated ?

The operations manager would like to use the solution proposed in Part 1, but it would be more convenient for his team to review the inventory level only twice a month (every 15 days). Considering his feedback, you decide to transform the Continuous Review Policy in Part 1 into a Periodic Review Policy (R, S).

What would the average replenishment order quantity be in this case?

What would the Order Up to Point quantity S be in this case?

Wooden Stuff really liked your job and has hired you as his new inventory manager! You now have to implement the Periodic Review Policy you suggested in Part 4. It is your first week in the company and the supplier of the Lifting Table has contacted you to make you an offer.

The supplier offers to reduce the lead time by 7 days (so your new lead time would be 3 days) but with an increase of 5% in the cost per unit. If you decide to take his offer, how will this impact your inventory (in units)?

Reference no: EM132307063

Questions Cloud

How big is big data for discovery health : How big is Big Data for Discovery Health? (Discovery Health Turns Big Data into Better Healthcare)
Communication flows associated with business : What are some examples of how these flows are used for communication: Provide examples? Why are clarity an d certainly necessary to each flows proper functions?
Who would you work best with and why : What parts of his discussion point out the strategic influence a performance consultant needs to possess within an organization?
Find out the total budget at completion of the plan : The goals and objectives of the project: Identify project goals and the underlying objectives. Quantify the measurable performance expectations of the project.
What would the average replenishment order quantity : Wooden Stuff is a furniture retailer operating in Cambridge, Boston. What would the average replenishment order quantity be in this case?
Setting and following a budget : Within the business context who is responsible for setting and following a budget? Which components of the organization should play
What horizontal force would necessary to displace position : A 27-kg chandelier hangs from a ceiling on a vertical 4.0-m- long wire. What horizontal force would be necessary to displace its position 0.15m to one side
What are four communication flows associated with business : What are four communication flows associated with business? What are some examples of how thes flows are used for communication
What truth do you think o brien is seeking to resurrect : Tim O' Brien states, "Story can save us." He points out that his writing protests national and cultural erasure. Americans are endlessly asked to forget.

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd