Undergraduate Littlefield Game: Inventory Management Fixed-order quantity model with safety stock !!!!!!!!!!!!!!! "L#$%# "&I'( !!!!!!!!!!!!!!!!

)ear students* +n the res,onsive game* you need to a,,ly what you have learned in inventory management* i e * you need to set u, the reorder ,oint -&. and reorder quantity or economic order quantity -#+/. ,ro,erly 0ou MU%( do the following analysis on the first day of the game and show it to me on your re,ort Open your textbook (page 601). $ 1+2 (+ 3$L3UL$(# & -&#+&)#& "+I'(. 3lick the 4customer orders5 icon on the L( we6 so that you can calculate: $verage num6er of 7o6s arriving each day 8 customer orders each day 8 daily demand 8 daily inventory usage 8 d 6ar %tandard deviation of daily demand 8 sigma d 1ow to do it9 Go to L( we6* then click the 4customer orders5 icon: 4,lot 7o6 arrivals5: 4download5: %ave on deskto, $fter that* o,en it using #xcel and a,,ly the following formulas -assuming you have ;< data or ;< days and your data starts at cell =>.:
=AVERAGE (B1:B50) =STDEV(B1:B50)

If you do not have ;< data or your data starts at a different cell* then modify the formulas accordingly $lthough your com,uter has Microsoft #xcel* in some cases your com,uter does not allow you to o,en the L( data 6y clicking 4+,en Using 5 (wo ways to overcome this ,ro6lem: > ? #asy way: +,en it using Microsoft 2ord and then co,y and ,aste into Microsoft #xcel More difficult way: +,en Microsoft #xcel:File:+,en:Look in )eskto,: File name: $ll files or ! !: 3lick the L( data:+,en:'ext:'ext: Finish

"urchasing -new inventory@raw material. lead time is L 8 A days -constant. %igma L 8 %/&( -L x -sigma d. B?.

"age > of ?

(herefore* you must set your reorder ,oint -& in 6atches. at least 8 demand during the lead time C safety stock Dequation >; ;* ,age E<>F 8 A x d 6ar C safety stock 2here safety stock 8 G x sigma L $ssuming the customer demand follows the normal distri6ution and using the em,irical rule in statistics* if you set G 8 H then you will cover II JAK of the demand (herefore* if you use G larger than H such as A or ;* most likely you always have enough raw material inventory* i e * no stock out 1owever* larger G also means that you carry more inventories that cost your money I ex,lained this in class = 1+2 (+ 3$L3UL$(# #+/ -#3+'+MI3 +&)#& /U$'(I(0.

(o find #+/* refer to exam,le >; A -,age E<H. where: % 8 L><<< 3 8 LE<< ,er 6atch of E< kits 1 8 ><K x ,er year of LE<< ,er 6atch of E< kits 8 LE< > year 8 HE; days ) 8 yearly demand 8 d 6ar x HE; /o,t in 6atches 8 #+/ in 6atches 8 %/&( -? x d 6ar x HE; x ><<< @ E<. Good luckM &egards* $hmad %yamil

"age ? of ?