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Pages:
3 pages/≈825 words
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3 Sources
Level:
APA
Subject:
Management
Type:
Coursework
Language:
English (U.S.)
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MS Word
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Topic:

Chapter 12 - Managing Uncertainty in a Supply Chain: Safety Inventory (Coursework Sample)

Instructions:


1. Using the Wal-Mart Demo for Example 4, what happens to the Required Safety Stock inventory when the Desired Customer Service level is increased to 95%? What happens to the Required Safety Stock inventory when the Desired Customer Service level is decreased to 80%? What about 70%? What did you learn from this exercise?
Note: This is not a “Solver” problem. Just change the service level directly in Excel from .90 to .80 and .70 to see the impact on safety inventory.
2. Using the Wal-Mart Demo, what happens to the Required Safety Stock inventory when the periodic review interval is changed to quarterly, i.e., 12 weeks versus 4 weeks? What happens when it is changed to weekly, i.e., 1 week versus 4 weeks? What did you learn from this exercise?
Note: This is not a “Solver” problem. Just change the Review Interval directly in Excel from 4 weeks to 12 weeks to 1 week, respectively.

source..
Content:


Managing Uncertainty in a Supply Chain: Safety Inventory
Author Name
Institution Affiliation
From the Wal-Mart Demo for Example 4, I have learned that the safety stock inventory and the desired cycle service level are linked to one another (Arshinder et al. 2011). It may not be possible for us to increase the cycle service level of a product without increasing the safety stock. In other words, we can say that if the safety stock decreases, then the cycle service level will also decrease.
Desired cycle service level =

0.7





Answer




Intermediate calculation


Mean demand during lead time RL =

5000

SD of demand during lead time sL =

707





Results




Required safety inventory =

371

Desired cycle service level =

0.95





Answer




Intermediate calculation


Mean demand during lead time RL =

5000

SD of demand during lead time sL =

707





Results




Required safety inventory =

1163

It is now clear that the review interval and the safety stock requirement are directly lin

...
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