Qns_Tut03_Supply Chain Performance

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Ngee Ann Polytechnic *

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Industrial Engineering

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Jun 2, 2024

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Official (Closed) - Non Sensitive SUPPLY CHAIN SOLUTIONING TOPIC 3: SUPPLY CHAIN PERFORMANCE TUTORIAL QUESTIONS 1 The challenge for today’s supply chain leaders is designing supply chains to better meet consumers’ and customers’ needs. Every supply chain has to be tailored for strategic fit to achieve the balance between responsiveness and efficiency. Describe the six major drivers that can help a company to improve supply chain performance in terms of responsiveness and efficiency. 2 An ePaint Internet store is open 311 days per year. If annual demand is 10,000 gallons of Ironcoat paint and the lead time to receive an order is 10 days, determine the reorder point for paint. 3 For ePaint internet store, assume that daily demand for Ironcoat paint is normally distributed with an average daily demand of 30 gallons and a standard deviation of 5 gallons of paint per day. The lead time for receiving a new order of paint is 10 days. Determine the reorder point and safety stock if the store wants a service level of 95% with the probability of a stock out equal to 5%. d = 30 gallons per day LT = 10 days σ = 5 gallons per day For a 95% service level, z = 1.65 Safety stock= z σ √ 𝐿𝑇 = 1.65*5*√10 = 26.1 gallons R= d*LT + z σ √ 𝐿𝑇 = 30*10 + 26.1 = 326.1 gallons 4 Spring’s Beds and Bedding is a large discounter of mattresses, beds, pillows and linens. The pillow inventory is managed using a fixed quantity reorder point system. For the large down-filled pillow, the weekly demand averages a very stable 300 units, with a standard deviation of 200. The replenishment lead time for the large down-filled pillow is two weeks. Spring’s currently maintains a 95 percent service level for all their pillows and orders the down-filled pillows in orders of 500 units. a. What is the safety stock and reorder point for Spring’s large down-filled pillow? Average demand per week, DL = 300 Standard deviation of weekly demand, σ = 200 Lead time = 2 weeks CSL = 95%, z = 1.645 Safety stock, ss = z * σ * √L = 1.645 * 200 * √2 = 465.28 ≈ 465 units ROP = D * L + ss = 300 * 2 + 464.28= 1,065.28 ≈ 1,065 units Spring should carry 465 safety inventory of large down-filled pillow. The ROP should be 1,065.
Official (Closed) - Non Sensitive b. If the store manager is targeting a cycle service level of 99 percent, what safety inventory should they carry? What should their ROP be? CSL = 99% z = 2.33 Safety stock, ss = z * σ * √L = 2.33 * 200 * √2 = 659 units ROP = D * L + ss = 300 * 2 + 659 = 1259 units 5 Weekly demand for HP printers at a Sam's Club store is normally distributed with a mean of 250 and a standard deviation of 150. The store manager continuously monitors inventory and currently orders 1,000 printers each time the inventory drops to 600 printers. HP currently takes two weeks to fill an order. How much safety inventory does the store carry? What CSL does Sam's Club achieve as a result of this policy?
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