Motorola wants to compare the continuous and periodic review strategies for cell phones manufactured in China for the U.S. market. The U.S. market is served from a single warehouse in Memphis, Tennessee. The company provides the following information about demand:
|
US Warehouse
|
|
Demand, units/day
|
4000 |
| S,d units/day |
5000 |
|
Lead time, days
|
36 |
If Motorola follows a continuous review policy and orders from their supplier in China in lots where Q=80,000, what level of safety inventory is required to achieve a CSL of 95%?
What level of total inventory will Motorola hold under the continuous review policy?