Question

Lily has been running out of stuffed animals and cannot seem to keep any on the shelf. She decides she needs to increase her safety stock. She knows that the average lead time delivery is 2 weeks. She also knows that her demand is 122 stuffed animals each week. She wants to boost her safety stock up to 3 weeks of demand. How low can her inventory get before she needs to purchase more stuffed animals? (Round to the nearest whole number)

Answer 1

To calculate the lowest point at which Lily needs to purchase more stuffed animals, we need to determine the safety stock. Given the average lead time and demand per week, we can calculate the safety stock as 732 animals.

Step-by-step explanation:

To determine how low Lily's inventory can get before she needs to purchase more stuffed animals, we need to calculate the safety stock. Safety stock is the amount of inventory kept on hand to protect against variability in demand or lead time.

Given that the average lead time delivery is 2 weeks and the demand is 122 stuffed animals each week, we can calculate the safety stock as follows:

1. Calculate the demand during the lead time: 2 weeks x 122 animals/week = 244 animals
2. Multiply the demand during lead time by the number of weeks of safety stock desired: 244 animals x 3 weeks = 732 animals

Therefore, Lily's inventory can get as low as 732 stuffed animals before she needs to purchase more.