Final answer:
To calculate the order quantity using the fixed-time period inventory model, the expected demand over the lead time plus the review period is determined and then combined with the safety stock, after which the inventory on hand is subtracted. The result is an order quantity of 1,802 units.
Step-by-step explanation:
The fixed-time period inventory model given requires calculating the order quantity considering the daily demand, inventory reviews schedule, and lead time. The average daily demand is 145 units, and we have a standard deviation of 3. With a review period of 9 days and a lead time of 4 days, we need to calculate the demand over the lead time plus the review period (LT + R). The safety stock is calculated by multiplying the z-score with the standard deviation and the square root of LT + R. Lastly, we add safety stock to the expected demand over the time frame and subtract the current inventory on hand to find the order quantity.
Expected demand over LT + R = 145 units/day * (9 days + 4 days) = 1,885 units
Safety stock = 1.96 (z-score) * 3 (SD) * √(9 + 4) = 1.96 * 3 * √13 ≈ 20.58 (round up to 21 units)
Order quantity = Expected demand + Safety stock - Inventory on hand
Order quantity = 1,885 + 21 - 104 = 1,802 units