Inventory Management
Benetton is considering pooling its thread inventory by knitting sweaters, then dyeing. The current process orders already dyed thread in 4 colors, then knits 4 colors of sweaters. They use the continuous review (Q,R) system to determine inventory levels. Demand for the year for each color sweater is forecasted to be normally distributed and independent from the other colors with a mean of 1500 and a standard deviation of 500. Leadtime is 1 month and the service level is 85%.
- What is the total inventory (using Reorder point) for all four sweaters?
- Benetton is considering pooling, where they will instead order undyed thread, then later knit. What is the total inventory (using R) for all four sweaters now?