solution for assignment 2

profileYuzhi Zhao
Week3assignment2MGT608.xlsx
Home>Applied Sciences homework help>solution for assignment 2

ROP example

Reorder Point with Safety Stock
But what if demand isn't constant?
But what if delivery isn't reliable??
Daily demand (average) DD = 85.25 units/day Historical Data
Standard deviation of Demand = 7.2240916384 units/day Daily Demand (units) Length of each replenishment cycle (days)
80 12
Length of replenishment cycle (average) = RC = 12.2222222222 days 85 12
Standard deviation of Replenishment Cycle = 0.629 days 75 11
70 13
Service level target = 95% 78 12
z = 1.644853627 83 12 When demand is uncertain (always) and replenishment cycle is uncertain (always).
88 13
Reorder Point without Variability = 1,041.940 units 93 12
+ 95 13
Safety Stock (to buffer from variability) = SS = 97.4443214841 units 94
= 90
Reorder Point (in the real world!) = ROP = 1,139 units 83
(round to the nearest unit) 90
85
95
80
Extra: How much more would it cost to increase Safety Stock to reach a 97% Service Level? To reach 99% Service Level?
1364 110
85.25 12.2222222222
Historical Data
Daily Demand (units) Length of each replenishment cycle (days) Variance V^2 V V^2 z
80 12 5.25 27.5625 -0.22222 0.0493817284 1.645 52.1875 12.2222222222 0.3950617284 7267.5625
85 12 0.25 0.0625 -0.22222 0.0493817284
75 11 10.25 105.0625 -1.22222 1.4938217284 637.8472222222 2871.135802505
70 13 15.25 232.5625 0.77778 0.6049417284
78 12 7.25 52.5625 -0.22222 0.0493817284 Sum 3508.9830247272
83 12 2.25 5.0625 -0.22222 0.0493817284
88 13 -2.75 7.5625 0.77778 0.6049417284 SQRT 59.2366695952
93 12 -7.75 60.0625 -0.22222 0.0493817284 SS 97.4443214841
95 13 -9.75 95.0625 0.77778 0.6049417284
94 -8.75 76.5625
90 -4.75 22.5625
83 2.25 5.0625
90 -4.75 22.5625
85 0.25 0.0625
95 -9.75 95.0625
80 5.25 27.5625
0 835 3.5555555556
52.1875 0.3950617284
7.2240916384 0.6285393611
For 97% Z = 1.881
Daily demand (average) DD = 85.25 units/day z
Standard deviation of Demand = 7.2240916384 units/day 1.881 52.1875 12.2222222222 0.3950617284 7267.5625
Length of replenishment cycle (average) = RC = 12.2222222222 days 637.8472222222 2871.135802505
Standard deviation of Replenishment Cycle = 0.629 days
Sum 3508.9830247272
Service level target = 95%
z = 1.644853627 SQRT 59.2366695952
SS 111.4241755085
Reorder Point without Variability = 1,041.940 units
+
Safety Stock (to buffer from variability) = SS = 111.4241755085 units
=
Reorder Point (in the real world!) = ROP = 1,153 units
The organization require 14 more units increase Safety Stock to reach a 97% Service Level
For 99% Z = 2.326
Daily demand (average) DD = 85.25 units/day z
Standard deviation of Demand = 7.2240916384 units/day 2.326 52.1875 12.2222222222 0.3950617284 7267.5625
Length of replenishment cycle (average) = RC = 12.2222222222 days 637.8472222222 2871.135802505
Standard deviation of Replenishment Cycle = 0.629 days
Sum 3508.9830247272
Service level target = 95%
z = 1.644853627 SQRT 59.2366695952
SS 137.7844934784
Reorder Point without Variability = 1,041.940 units
+
Safety Stock (to buffer from variability) = SS = 137.7844934784 units
=
Reorder Point (in the real world!) = ROP = 1,180 units
The organization require 41 more units increase Safety Stock to reach a 99% Service Level
References
Suryono, S., Suseso, J. E., Mashuri, C., Sabila, A. D., Nugraha, J. A. M., & Primasiwi, M. H. (2017). RFID Sensor for Automated Prediction of Reorder Point (ROP) Values in a Vendor Management Inventory (VMI) System Using Fuzzy Time Series. Advanced Science Letters, 23(3), 2398-2400.
Umry, T. F., & Singgih, M. L. (2019). Inventory Management and Reorder Point (ROP) Strategy Using ABC Analysis Methods in Textile Manufacture. IPTEK Journal of Proceedings Series, (5), 1-7.

𝑆𝑆=𝑧

ඥ

𝜎

2

𝐷𝐷

∗𝑅𝐶+ 𝜎

2

𝑅𝐶

∗𝐷𝐷

2

𝜎

𝐷𝐷

=

𝜎

𝑅𝐶

=