Assignment:
Motorola wants to compare the continuous and periodic review strategies for cell phones manufactured in China for the U.S. market. The U.S. market is served from a single warehouse in Memphis, Tennessee. The company provides the following information about demand:
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US Warehouse
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Demand, units/day
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4000
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S,d units/day
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5000
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Lead time, days
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36
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If Motorola follows a continuous review policy and orders from their supplier in China in lots where Q=80,000, what level of safety inventory is required to achieve a CSL of 95%?
What level of total inventory will Motorola hold under the continuous review policy?