A discount retail store uses a periodic inventory review system under which each

Question

A discount retail store uses a periodic inventory review system under which each item 's inventory level is reviewed twice monthly (i.e., review every half month). Suppose it has been determined that a particular item has an average demand of 6,000 units per month, with a standard deviation of 100 units per month. It lead time is 15 days (assume one month is 30 days) and the store wants a service level of 85%. How much safety stock should be held? (Round answer to whole number) 73 100 l 71 104 6000 What should the target inventory level be? 6073 6100 71 6104 6000  100  85 5100 What is the inventory position if the on-hand inventory is zero, the scheduled receipts are 5000 and there are outstanding backorder for 2000 units? 5000 0  3000  2000  7000

Explanation / Answer

the target inventory level is = safety stock + normal inventory level= 104+6000= 6104, option D is right answer

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