Course Solutions Uncategorized (Answered) : Let us consider an item whose inventory is controlled by a periodic review and a base-stock policy. Assume that the review perio

(Answered) : Let us consider an item whose inventory is controlled by a periodic review and a base-stock policy. Assume that the review perio

Let us consider an item whose inventory is controlled by a periodic review and a base-stock policy. Assume that the review period is 1 day, the replenishment lead-time is 5 days, and the daily demand is a normal distribution function with a mean 100 and standard deviation 30.

1) Calculate the base stock B to assure that the service level is 0.90?
2) Calcuate the average inventory level?
3) Calculate the stock-out periods might you expect per year? (Assume 250 days per year)

Expert Answer


Let the Protection Period ( P ) = Review period + Lead time = 1 + 5

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