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?
Operations Management -