Current service level 60% are on time 15% are 1 day late 10% are 3 days late 10%

Question

Current service level

60% are on time

15% are 1 day late

10% are 3 days late

10% are 5 days late

5% are 8 days late.

Lead time =12 days

What's the average lead time in days after 40% improvement in the service level? Please show your work!

Problem 3: Late Deliveries Lead time (days) 12 Price per unit $150 Net cost per unit $100 Inventory carrying cost 30% Cost of capita 16% Demand per day (units) 1500 In-transit inventory carrying cost 18% Current Service Level 60% are on time 15% are 1 day late 10% are 3 days late 10% are 5 days late 5% are 8 days late

Explanation / Answer

Given that 60 % are on time

So x days are required for 60 % of service.

15 % require 1 extra day. = 1 explicit day

10 % require 3 extra days =3-1 = 2 explicit day

10 % require 5 extra days =5-2-1=2 explicit day

5 percent 8 extra days= 8-2-2-1=3

So total days

x+ 1 +2 + 2+ 3 = 12

So x=4

So for 60 % 4 days are needed.

So there is increase in 40 % service level so 40 % more service provided in same time

So 74 % are completed in one same amount of day ie 4 days.

Next 21 % are completed in one extra day

And remaining 4 % completed in 3 extra i.e 2 explicit days

So total days required is 4+1+2=7

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