Problem: Order-up-to /Base-stock Model: Explain how the replenishment planning for the Gap clothing item example from the lecture notes would change if the replenishment lead time is two weeks. That is, clearly specify the inventory entity you would track and the order-up-to or base-stock level value that you would use. FYI, the relevant Gap data is copied below from the slides:
- GAP orders a particular clothing item every Friday
- weekly demand is normal with mean = 100, std dev = 25 units
- wholesale cost is $10, retail is $25
- holding cost has been set at $0.5 per week (to reflect obsolescence, damage, etc.)