given the following information, provide an example of how much of farmers sausage gravy mix should be ordered. You are doing the order for thursday. service level 95%, and standard deviation of 3.5 units per week, and a moving average weekly demand of 35 servings. the gravy mix comes in packs of two servings. there are currently three packs in inventory"
To determine how much of the farmer's sausage gravy mix should be ordered, we need to calculate the reorder point. The reorder point is the demand during the lead time plus the safety stock. In this case, we are assuming a one-week lead time.
To calculate the reorder point, we need to consider the service level and the standard deviation. The service level determines how much safety stock we should have to meet customer demand while minimizing the risk of stockouts. Let's assume a service level of 95%.
1. Calculate the safety stock:
Safety stock = (Service level * Standard deviation) * Square root of lead time
The lead time is one week, so the square root of lead time is also 1.
Safety stock = (0.95 * 3.5) * 1 = 3.325
2. Calculate the reorder point:
Reorder point = Average weekly demand + Safety stock
Given that the average weekly demand is 35 servings:
Reorder point = 35 + 3.325 = 38.325 servings
Since the gravy mix comes in packs of two servings, we need to round up the number of servings to the nearest pack.
Rounded-up reorder point = Round up (Reorder point / 2) * 2
Rounded-up reorder point = Round up (38.325 / 2) * 2 = 40 servings
Therefore, for Thursday's order, we should order at least 40 servings of the farmer's sausage gravy mix.
Considering that there are already three packs in the current inventory, you would subtract this quantity from the reorder point to determine the actual amount to be ordered.
Actual amount to be ordered = Rounded-up reorder point - Current inventory
Actual amount to be ordered = 40 - 3 = 37 servings (or 19 packs)
So, you should order 37 servings of the farmer's sausage gravy mix (equivalent to 19 packs) for Thursday's order.