Reference no: EM131759159

The company Q-Tec is specialised on Computers. Currently, the model C453X is very popular. It is sold to the final customer in 45 retail stores. These stores are only open on 4 days per week (for historical reasons, Thursday – Sunday). During these days, the daily demand of C453X in each of the stores is normally distributed with mean demand 50 units and standard deviation 25 units. The company uses an s,Q policy to manage the local warehouse at each of the stores individually. Q-Tec orders directly from the supplier and receives the orders after 9 weeks.

a) In order to have a CSL of at least 95% in each of their local storages, how must the reorder point (s) be set? How large is the total safety stock in the network?

b) The last year was not very successful for Q-Tec. Therefore they consider to close all their stores and to offer their products only online. The customers would then receive the goods from a central warehouse. If in this warehouse the CSL should be 99.76%, how large is the safety stock? How much can be saved in terms of safety stock compared to the situation in a)

c) Finally, Q-Tec decides on a different alternative. There will be one central new warehouse (CSL = 99.76%) but the 45 stores remain. The central warehouse will get the products from the supplier and will then be delivered to the stores with a lead time of only 2 days. In the stores, again a CSL of 95% should be reached. How does this affect the inventory in the network if you assume that the products belong to Q-Tec when they arrive in the central warehouse? Compare your results with a) and b) and give a recommendation and justification.