ame Lisa Fleet, the manager of an automotive repair shop, hopes to achieve a bet
ID: 372454 • Letter: A
Question
ame Lisa Fleet, the manager of an automotive repair shop, hopes to achieve a better allocation of inventory control efforts through an examination of historical usage for various parts Lisa is concerned about being able to provide superior service in order to command a competitive advantage over other local repair shops. That is one reason Lisa keeps her shop open seven days a week, 52 weeks per year. Currently, her shop inventories over 1,000 items. Although a priority of Lisa's is providing superior customer service, are also a large number of local competitors so cost control is equally important. By keeping an inventory of some items (e.g., wiper refills), she is better a customers back on the road more quickly. Furthermore, Lisa uses a bar coding systenm that provides her a continuous count of the items she keeps inventory. Lisa has collected the following system data: there ble to get Lisa's parts supplier guarantees her next day delivery, seven days a week, for all tems. Lisa estimates her annual holding cost to be about 5 percent of the item purchase price. Lisa estimates the activities required to place an order cost about $25. Below you will find historical demand figures of 8 different items. In addition, the average service time and service time standard deviation it takes Lisa's shop to service a vehicle requiring the item is noted. Average Standard Deviation tem Average Shop Shop Service Time Item Weekly Demand of Weekly Demand Purchase Price Service Time Std Deviation 3 days 10 minutes 2 days $200 225 I unit 5 units 12 units 23 units 6 units 2 units l unit 4 units Water pump Starter motor 28 nits Battery Spark plug 183 units negligible 1 hour 79 units 25 units Alternator Wiper refill 175 190 14 91 units 5 minutes egigible In order to implement her desire to utilize a continuous review inventory system, Lisa needs to make a variety of modeling assumptions for each item in order to determine the appropriate order quantity (Q). Identify the relevant modeling assumptions in the following list for Lisa by checking the associated box. 1. desired service level one product storage space requirements known and constant cost information target (maximum) inventory value no stock outs allowed lead time parameters (avg and ) known and constant order lead time known and constant demand rate number of items in her system standard deviation of lead time demand no quantity discounts permitted desired length of review period instantaneous resupply competition's cost information order interval to useExplanation / Answer
1) In order to determine the appropriate order quantity Q, the modeling assumptions are :
2) The relevant information -
Rest all come under irrelevant information.
3) The alternative approach that Lisa might adopt other than continuous review inventory system is - Periodic review inventory system. Periodic inventory review involves counting and documenting inventory at specified times.
Modelling parameters are - safety stock, cycle service level, cycle inventory, reorder point, standard deviation of demand during review interval, average lead time for replenishment, average demand per period, standard deviation of demand per period, order up to level, average inventory level, lot size
SS = Fs-1(CSL) x T+L
DT+L = (T + L) D
T+L = (T+L) D
Order Upto Level = DT+L + SS
Average Inventory Level = (DT)/2 + SS.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.