The demand for a product for the past 30 periods is shown below. Determine the reorder point, R, and order-up-to-level, S, for this product for the next 6 periods (periods 31-36). Use the following instructions/information.
Plot the demand data. What types of forecasting models would be appropriate for this demand pattern? The lead time is 2 periods. Use fixed ordering cost of $80/order and inventory holding cost of $1.75/unit/period. Forecast the demand for this product in Minitab using Double Exponential Smoothing with smoothing constants of ? = 0.20 and ? = 0.20 (use Minitab to generate forecasts). Calculate the standard deviation of the one-period-ahead forecast error using the most recent n=8 periods (use Minitab to generate one-period-ahead forecasts).
a) Determine the reorder points, R, and order-up-to-levels, S, for the next 6 periods using a probability of no stockout (Type-1 service) of 0.98.
b) Determine the reorder points, R, and order-up-to-levels, S, for the next 6 periods using a fill rate (Type-2 service) of 98%.