Question

A bottling plant uses approximately 5,000 plastic bottles per day (normally distributed), while daily usage has a standard deviation of 67. Order lead time is 4 days (constant).

Consider the plastic bottles demand pattern from Problem 1. Suppose we plan to set up a periodic review inventory system instead, and we will order this item every 9 days. Order lead time is still the same as in Problem 1.

What is the protection interval?

Answer 1

The protection interval in a periodic review inventory system is the period of time between placing an order and receiving the order. In this case, the order is placed every 9 days and the order lead time is 4 days. To calculate the protection interval, we subtract the order lead time from the order cycle time. The order cycle time in this case is 9 days, so the protection interval is 9 days - 4 days = 5 days.

Step-by-step explanation:

The protection interval in a periodic review inventory system is the period of time between placing an order and receiving the order. In this case, the order is placed every 9 days and the order lead time is 4 days.

To calculate the protection interval, we subtract the order lead time from the order cycle time. The order cycle time in this case is 9 days, so the protection interval is 9 days - 4 days = 5 days.

Therefore, the protection interval in this case is 5 days.