Periodic Review System The hospital gift shop orders get well cards and uses a w

Question

Periodic Review System The hospital gift shop orders get well cards and uses a weekly periodic inventory system to maintain the inventory. Below is the number of cards sold for the last 5 weeks. What is the hospital's average weekly demand for get well cards? Assume the standard deviation of demand is 9.03 cards and the hospital wants to be in stock at least 95% of the time. What is the appropriate restocking level? If there are currently 30 get well cards on hand when the order is placed on 4/10/16, how many cards should be ordered?

Explanation / Answer

(a) Hospital's average weekly demand =(101+94+82+97+106)/5

=96

(b)

stanadard deviation =9.03

Service level=95%,z=1.65

safety stock= stanadard deviation*z=9.03*1.65=14.89

=15 (apprx)

Restocking level = average demand per week + safety stock=96+15

=111

(c) well cards in hand =30

card should be ordered= 111-30

=81

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