Answer to Question #114767 in Management for Noor Sultan

Question

The ABC Company finds that to its surprise, the material used in many of its items has a constant usage of 200 units per week. The supplier will only deliver this material in lots of 2000 units. The lead time for delivery from the supplier has been found to be normally distributed with a mean of 4 weeks and a standard deviation of 1 week. The company wishes to be out of stock of the items for no more than 3 days at most of the 250 days per year that it operates. What safety stock should it carry for this item?

Answer 1

From this explanation, it is clear that ABC Company takes breaks in its operations. Therefore, the most suitable safety stock the company must conduct is a safety time Systems Applications and Products in Enterprise Requirement Planning. This method will allow the company to define its buffer as a time. The method also determines the offset between the planned supply time and demand time. Moreover, the method allows for flexibility, and it is easy to use.