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1. What should the case fill rate be for each product given the current uncertainty levels and order quantities and how does the calculated aggregate case fill rate differ from the historically observed level?
2. What are the safety stock and average inventory levels for each product and in aggregate necessary to achieve 95 percent case fill rate for each product? To what extent do the actual inventory levels deviate from the theoretical inventory levels? What conclusions can you draw from the differences?
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3. What is the inventory carrying cost impact for increasing the case fill rate from the current level of 95 percent to 99 percent? Assume an annual inventory carrying cost of 20 percent. Assuming that 5 percent of potential sales is lost due to stock outs (I00 – 95 percent) and that there is a 25 percent margin on the average item (COGS = 75 percent), would you recommend that the service level be increased? Justify your answer.
4. What would be the impact on inventory and service of consolidating all of Atlantic Medical stock into a single facility? Apply both the square of n and item level approaches. The square root of n should be applied to aggregate inventory values for a total of all products. The item level approach combines the averages and standard deviations used for the individual sites into the demand and standard deviation representing a single site. The weekly average for the combined site is the sum of the weekly averages. The combined weekly standard deviation is
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