posted by Zack on .
6. You manage the Distribution Center shown in the diagram below which, for one particular product, supplies only the two retail locations, A and B. You want to convert from your old Reorder Point-based ordering format to Pull Replenishment. It takes you 2 days to get the product to location A – and demand seems to vary a lot (sometimes it’s only 5 per day, a few times it’s been 20 per day). It takes you 3 days to get the product to location B – but it’s never sold more than 15 of that product on any given day. Further, YOUR vendor for the product takes 2 days to get whatever you order delivered to you Distribution Center. You want to ensure a “win-win” outcome for yourself as well as your retail locations such that each of you holds sufficient numbers to be able to meet demand but little/no excess product.
a. What is the buffer size for Retail Location A?
b. What is the buffer size for Retail Location B?
c. What is YOUR optimal buffer size?