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Undergraduate Littlefield Game: Inventory ManagementFixed-order quantity model with safety stock

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+n the res,onsive game* you need to a,,ly what you have learned in inventorymanagement* ie* you need to set u, the reorder ,oint &. and reorder quantity oreconomic order quantity #+/. ,ro,erly

0ou MU%( do the following analysis on the first day of the game and show it to me onyour 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 day8 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 arrivals54download5 %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 formulasaccordingly $lthough your com,uter has Microsoft #xcel* in some cases your com,uterdoes not allow you to o,en the L( data 6y clicking 4+,en Using5 (wo ways toovercome this ,ro6lem:

> #asy way: +,en it using Microsoft 2ord and then co,y and ,aste into Microsoft

#xcel? More difficult way: +,en Microsoft #xcelFile+,enLook 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 ?

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(herefore* you must set your reorder ,oint & in 6atches. at least

8 demand during the lead time C safety stock Dequation >;;* ,age E8 A x d 6ar C safety stock

2here safety stock 8 x sigma L

$ssuming the customer demand follows the normal distri6ution and using the em,iricalrule in statistics* if you set 8 H then you will cover JAK of the demand (herefore* ifyou use larger than H such as A or ;* most likely you always have enough raw materialinventory* ie* no stock out 1owever* larger also means that you carry moreinventories 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