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Global distributor for quality portable digital products

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Reference no: EM132202542

Digital Direct, Inc. is a manufacturer and global distributor for quality portable digital products. The daily demand (Monday through Friday) to one of its main product, DVD-10s, is approximately normally distributed with a mean of 8,000 units and a standard deviation of 620 units. The 10” LDC screen used in DVD-10s are currently produced by company’s Indonesian supplier with a shipping (air freight plus domestic trucking) time approximately 14 days. Assuming the unit holding cost for the LCD screen is $180/(unit, year) and EOQ= 40,000 units.

Suppose that the company would like to ensure a 95% probability of no stock out for the LCD screen, propose the safety stock to achieve this service level. How about 98% probability? How much more safety-stock is required as compared to 95%?

Reference no: EM132202542

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