Case Scenario: Designing the safety inventory for Wanda Square Cellphone Store
Weekly demand for Huawei cell phones at a Wanda Square store is normally distributed, with a mean of 500 and a standard deviation of 300. Huawei takes 4 weeks to supply a Wanda Square store order.
Study Questions:
Q1. Wanda Square store is targeting a CSL of 95 percent and monitors its inventory continuously. How much safety inventory of cell phones should Wanda Square carry? What should its ROP be?
Q2. Reconsider Wanda Square store in a), re-evaluate the safety inventory of the Huawei cell phones that Wanda Square store must carry if the standard deviation of the lead time is 2 weeks?
Q3. The store manager has decided to follow a periodic review policy to manage inventory of cell phones. She plans to order every three weeks. Given a desired CSL of 95 percent, how much safety inventory should the store carry? What should its OUL be?