Saferty Stock Complications

 Saferty Stock Problems Article


Problem one particular:

Litely Corp sells 1, 350 of its particular decorator mild switch each year, and locations orders pertaining to 300 of the switches each time. Assuming no safety shares, Litely estimates a 50 percent chance of simply no shortages in each circuit, and the possibility of shortages of a few, 10, and 15 models as zero. 2, 0. 15, and 0. 12-15 respectively. The carrying cost per product per year is usually calculated since $5 plus the stockout expense is estimated for $6 ($3 lost profit per swap and one other $3 lost in goodwill, or foreseeable future sales loss). What degree of safety inventory should Litely use just for this product? (Consider safety stock of zero, 5, 12, and 15 units)

Holding cost equates to zero.

Stockout cost:

Stockout price:

(there is no scarcity if 12-15 units happen to be maintained)

As a result: Minimum price comes from transporting a 10-unit safety inventory.

Problem two:

A product provides a reorder level of 110 units, which is ordered several times a year. The following stand shows the historical division of require values noticed during the reorder period.




. 3

one hundred ten

. 4

one hundred twenty

. 2


. 1

Managers have mentioned that stockouts occur 30 percent of the time with this coverage, and issue whether a difference in inventory policy, to include a few safety share, might be a noticable difference. The managers realize that any safety share would improve the service level, but are worried about the elevated costs of carrying the safety stock. Presently, stockouts happen to be valued in $20 every unit every occurrence, when inventory transporting costs happen to be $10 every unit each year. What is your tips? Do higher levels of safety stock increase total costs, or not really? What level of safety share is best?


Safety inventory cost

Stockout cost

Total cost

ROP=110 (SS=0)

0 =


. 2 by 10 x 20 by 4 sama dengan


. one particular x twenty x twenty x 4 =





ROP=120 (SS=10)

10 x $10,50 =

hundred buck

. 1 times 10 by 20 by 4 =






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