Question

Consider the problem of shrinkage in a supply chain. Use this data: Expected Consumer Demand = 5,000 Retail: Theft and Damage - 5% Distribution Center: Theft and Damage - 4% Packaging Center: Damage - 3% Manufacturing: Defect rate - 4% Materials: Supplier defects - 5% How many units should the materials plan account for in order to meet the expected consumer demand? (Choose the closest answer.)

Answer 1

Answer: units = 6198

Step-by-step explanation:

expected consumer demand is 5000, the units that must be planned given shrinkage percentage levels in different stages of the supply chain we have to use the trial and error method.

lets try 6200 units

6200 x 95% = 5890, 5890 x 96% = 5654.4, 5654.40 x 97% = 5484.768, 5484.768 x 96% = 5265.37728, 56265 x 95% = 5002.108416 ≈ 5002

6198 units

(6198  x 95% = 5888.10) (5888.10 x 96% = 5652.576) (5652.576 x 97% = 5482.99872) (5482.99872 x 96% = 5263.6787712) (5263.6787712 x 95% = 5000.4948326) ≈ 5000

using the same procedure for 6197 units the answer will be 4999.688041

units that should be produced to cover the demand of 5000 = 6198