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?

Answer 1

Lily should reorder more stuffed animals when her inventory level falls to 366, which is her desired safety stock level equivalent to 3 weeks of demand.

Step-by-step explanation:

Lily has been experiencing a high demand for stuffed animals and is looking to increase her safety stock to ensure she does not run out. Currently, with a lead time delivery of 2 weeks and a demand of 122 stuffed animals per week, she wants to have a safety stock equal to 3 weeks of demand.

To calculate how low her inventory can get before needing to reorder, we consider her desired safety stock level. She wants a safety stock that covers 3 weeks of demand, which would be:

3 weeks * 122 stuffed animals per week = 366 stuffed animals

Therefore, Lily should reorder more stuffed animals when her inventory level falls to 366 to maintain a safety stock equivalent to 3 weeks of demand.