Question 13 (of 14) 13. Award:0 out of 10.00 points Problem 7-7 Thomas Toys Ltd.

Question

Question 13 (of 14) 13. Award:0 out of 10.00 points Problem 7-7 Thomas Toys Ltd. uses a periodic review inventory nt system. One important item for the company is building blocks, which sell, on average, eight sets per day. However, the standard deviation of demand is five sets per day. The company checks the status of inventory for building blocks every 7 days. When blocks are reordered from the supplier, it takes 11 days to be replenished. Thomas has just checked its inventory and found that it currently has 215 sets in stock. The company desires to maintain a 90 percent service level. Use Table 7-2 a. How many sets of building blocks should Thomas Toys order? (Negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to the noarest whole number) b. Do we re-order? Problem 7-7 07-04 Calculate inventory to acquisition cost in continuous review, periodic review, and

Explanation / Answer

Uncertainty Period = Inventory counted + Lead time = 7 + 11 days 18 days Standard deviation of demand during the uncertainty period = Sqrt(Uncertainity period x SD demand ^2) Standard deviation of demand during the uncertainty period ?ddup = Sqrt(18 x 5^2) 21.21 sets Q=d x UP + z x ?ddup – A order quantity = 8 x 18 + 1.645 x 21.21 - 215 -36.104 Sets Thomas Toys should not order NO

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