Question

Avon Barksdale's operation uses large quantities of prepaid cell phones, on average 500 per week with a standard deviation of 45. The lead time for their own brand of prepaid cell phones is 2 weeks and they have a lot size of 125 phones. If Mr. Barksdale sets his reorder point at 1,100 phones, what is his average cell phone inventory?

Answer 1

Answer:

162.5 phones

Explanation:

The Avon Barksdale's operation uses 500 cell phones per week. The order quantity is 125 phones which takes 2 weeks to to deliver. To calculate the average inventory for Avon Barksdale we will subtract reorder quantity from the weekly use of cell phones.

500 per week * 2 weeks = 1,000 cell phones

he reorder point is 1,100 phones.

1,100 - 1,000 = 100 cell phones

The lead time is 2 weeks for 125 phones delivery

125 / 2 weeks = 62.5

62.5 + 100 = 162.5 phones