What is the lowest service level

Assignment Help Operation Management
Reference no: EM13224678

The store manager - let's call her Stacy - buoyed by her streak of good ideas, comes up with another. She thinks back to the company motto- this is not a place where you find every product or brand on earth. She wants to see what the impact would be on store inventories and safety stocks. So she wants to bring down the selection of brands from 4 to 2. By now, each supplier has managed to make deliveries in 4 days (they don't like the price discounts).
She selects the two more popular brands and gives them each 50% of the market share.
The average consumer doesn't know much about printers, so they only want a good one at the cheapest price which Costco ensures, so the overall demand across the ink-jet printer category doesn't change.
1. What is the savings in safety stock with this new model, assuming that all 4 suppliers were delivering replenishment orders in 4 days before this new initiative?
2. Assuming the same holding cost per unit per week as before, and Stacy passes on the cost savings to the customers in the form of price reductions, by how much can Stacy reduce the price of the two products (in $) so she is no better or worse off than before with 4 suppliers delivering in 4 days each.
Due the arrival of a neighborhood Best Buy, Stacy observes the standard deviation of demand across the two printers is higher at 50 units per week. Costco still offers the best price, so average demand is unchanged.
3. But Stacy really (I mean really) dislikes inventory so she refuses to add any more safety stock (relative to II-1 above) to account for the higher standard deviation. She figures as long as she has sufficiently high service level on each printer, it is very unlikely that she will run out of both printers at the same time, so customers still have a good printer to buy. Will she regret her decision not to add any safety stock?
4. What is the lowest service level she can afford on each printer, so she can still enjoy 99% service level at the category level?

Reference no: EM13224678

Questions Cloud

Determine the cournot price-quantity and consumer surplus : Suppose the market demand function is given by: Q = 100 - 2P , where Q: total quantity, P: market price. And in this market there are two firms with MC=AV=$10. Find each of the following: 1. Perfect competition price, quantity, and consumer surplus
Explain a balanced chemical equation : Write a balanced chemical equation showing how it acts as an acid toward water. Express your answer as a chemical equation.
Legal issues associated with clinical psychology : What are at least two legal issues associated with clinical psychology? What impact do these issues have on the field of clinical psychology?
Explain how you would protect against currency variation : Is currency fluctuation on either or both of your lists? If so, would your protection strategies be the same or different? Explain how you would protect against currency variation.
What is the lowest service level : What is the lowest service level she can afford on each printer, so she can still enjoy 99% service level at the category level?
What is the outcome if the government provides to residents : Consider an economy with two separate regions: A and B. There are 100 million workers in total who supply their labor inelastically. The demand for labor (in millions) in region A is EA = ??100 - 15 wA and in region B it is EB= 100 - 15 wB.
Preparing a dramatic play area : You are preparing a dramatic play area in your 1st and 2nd grade multi-age classroom. how would you include props and materials to interate as many curricular disciplines as possible?
Compute that ph at the equivalence point : Using the value of Ka from your titration curve, calculate that pH at the equivalence point?
What is costco safety stock for each brand of printer : At a local Costco, there are exactly 4 types of ink-jet printers. The weekly demand for printers is estimated to be normally distributed with mean 360. The 4 brands have equal market share on average at that Costco, and the standard deviation of d..

Reviews

Write a Review

 

Operation Management Questions & Answers

  Explain how much could industry save annually in ordering

Currently manager orders once a month. Explain how much could industry save annually in ordering and carrying costs by using EOQ.

  Explain how has organization impacted internal department

Explain how has the organization impacted internal department's also external participants within the supply chain.

  What is the value of the game

Consider the following two-person zero-sum game. Assume the two players have the same two strategy options. The payoff table shows the gains for Player A.

  Name three qualities that are important in a leader

Name three qualities that are important in a leader. Elaborate on each of those qualities. Do today's leaders have to be more aware of their ethical behavior than leaders in the past

  How construct a new factory would result

Not constructing a new factory would result in no additional revenue being generated because the current factories cannot produce these new products. Construct a decision tree to help Expando make the best decision.

  Discuss this approach to inventory control

The use of computers and JIT (Just-In-Time) inventory strategies has enabled SCM (Supply Chain Management) Systems to minimize WIP (Work-In-Process) inventories. Discuss this approach to Inventory control and ways to mitigate disruptions in the sup..

  Describe how company try to deal with threat of price

Under what environmental conditions are price wars most likely to occur in the industry? What are the implications of price wars for a company?

  Writenarrative which defines boundaries

Complete a Flow Diagram which represents operations process identified in above problem statement. Write a 350-word narrative which defines boundaries also constraints of Flow Diagram.

  Do you concur with the dispute settlement decisions

Do you concur with the dispute settlement decisions in the World Trade Organization in this case? The panel report? The appellate decision? The arbitration ruling?

  Discussion on job sharing

Why are some employees entitled to overtime and others are exempt from being paid overtime? Explain what job sharing is and how it typically works in terms of compensation and benefits.

  Determine boundary points of the feasible region

Maxwell Manufacturing makes two models of felt tip marking pens. Requirements for each lot of pens are given below.

  What is d craig optimal strategy

D. Craig Exploration Company has been offered a lease to drill for oil on a particular piece of property. While oil has been found on nearby land, there are no assurances that D. Craig will be successful in finding oil

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd