Scenario 13.3 - We Have No Bananas
Weekly demand at the Banana Stand is 200 bananas with a standard deviation of 50.The replenishment lead time is 3 weeks from the plantation in Ecuador.The Banana Stand manager orders 1000 bananas when the inventory drops to 600.Each banana costs $0.50.The holding cost the Banana Stand incurs is 40%.
-Use Scenario 13.3 to answer the question.Suppose the Banana Stand decides to cut their lot size in half.What is the new customer service level?
A).65
B).60
C).55
D).50

Question

Quizplus · Accepted Answer

The customer service level is determined by the safety stock and reorder point. Cutting the lot size in half does not directly affect the customer service level, which is primarily influenced by the variability in demand and lead time, as well as the reorder point relative to the demand during lead time. Without changing the reorder point or the variability in demand and lead time, the customer service level remains unchanged.