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| Topic: |
Business
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| Number of pages / Number of words: |
5 / 1228 |
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We set a reorder point that would ensure a 95% probability of not stocking out.
R = D?L*?L*Z[alpha=95%] = 49.42856 + 7.11903*1.65 = 61.175 batches
However, due to a miscalculation, we set an incorrect reorder quantity of 1200 batches, which was too low. The miscalculation was due to using the daily demand value (12...
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The correct reorder quantity is 332.25 batches.
Expectedly, our inventory levels were quickly drained to 0 after each reorder (3 reorders took place until we set the correct reorder quantity), which resulted in higher order lead times and reduced daily average revenues from virtual day 89 to virtual day 100...
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