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Hi everyone, I came across the question below while studying. Can anyone assist me with how to work out the answer? Can’t seem to figure it out.
Layla Co. sells 200m wigs in a year with each order taking 15 days to be delivered once
made. They make an order every time their stock levels reach 10m wigs.
What is the buffer stock level for Layla Co.
A. 1,780,822
B. 6,666,666
C. 9,333,333
D. 2,345,632Answer A
During the lead time they will sell 15/365 x 200M = 8,219,178.
They place an order when they still have 10M in inventory.
Therefore they are carrying buffer inventory of 10M – 8,219,178 = 1,780,822
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