Asked by jayla houser on May 04, 2024
Verified
Consider a local club selling Christmas trees. If demand is normal with a mean of 200 and a standard deviation of 50, how many trees should the club stock if service level must be greater than 95%?
Service Level
A measure of the quality and effectiveness of a service, often evaluated in terms of customer satisfaction, response time, and the availability of services.
Standard Deviation
A measure of the amount of variation or dispersion in a set of values, indicating how much scores differ from the mean of the distribution.
Christmas Trees
In the oil and gas industry, an assembly of valves, spools, and fittings used to control the flow from a well.
- Identify thresholds for reordering and quantify safety stocks to manage stock levels effectively and maintain desired service quality.
- Master and employ the key concepts of inventory management in distinct scenarios such as goods with limited shelf life and fluctuating demand based on seasons.
- Learn about the trade-offs involved in balancing service levels, safety stock, and the expenses incurred from inventory.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
Z value for 95% service level is 1.65, thus ideal inventory is 200 + 50(1.65) = 282.5 = 283 trees
Learning Objectives
- Identify thresholds for reordering and quantify safety stocks to manage stock levels effectively and maintain desired service quality.
- Master and employ the key concepts of inventory management in distinct scenarios such as goods with limited shelf life and fluctuating demand based on seasons.
- Learn about the trade-offs involved in balancing service levels, safety stock, and the expenses incurred from inventory.