Exercise 12-20:
Inputs
Average demand per unit time D = 3,000
Lead time, L = 4
SD of demand per unit time σD = 1,000
Review Interval T = 12
Orde Up to Leve (OUL) 50,000
Distribution of Demand during T + L
Mean demand during T+L, DT+L = 48,000
SD of demand during T+L, σT+L = 4,000
Average Order Size
Average Order Size = 36,000
Safety Inventory and Cycle Service Level Using Period Review
Safety Inventory ss = 2,000
Cycle Service Level, CSL = 0.69
Safety Inventory with Desired CSL of 99%
Desired CSL 99%
Safety inventory, ss = 9,305
Required OUL = 57,305