During a heated meeting at SoxyBack Headquarters,Al suggests that the reorder interval be changed from 5 weeks to 2.5 weeks,Bob suggests the ten locations be consolidated to five locations,Charles demands that the customer service level be set at 0.925 instead of 0.975,and David declares their holding cost should be 25% rather than 30%.If these four statements are made regarding the current system as described in Scenario 14.2,which option has the lowest annual inventory cost?

Question

Quizplus · Accepted Answer

Reducing the reorder interval from 5 weeks to 2.5 weeks would decrease the amount of inventory that needs to be held at any given time, thereby reducing the annual inventory cost more significantly than the other options. Consolidating locations, changing the customer service level, or adjusting the holding cost percentage would not directly reduce the amount of inventory held as effectively as halving the reorder interval.

During a Heated Meeting at SoxyBack Headquarters,Al Suggests That the Reorder