Retail Store – 1.2 % of all the items that are accepted by the retail store are either stolen or
damaged in the store, and are thus unavailable for sale.
5.
(2 POINTS)
Using the calculation for damage and defects discussed in lecture, calculate the number
of standardized sets that must be planned for in order to have 7,500 sets available to the customer each

6.
(2 POINTS)
Based on our estimates, how many extra kitchen sets will need to be purchased/produced

7.
(2 POINTS)
The kitchen sets sell $275.00 per set.
They cost about $200 to produce, deliver, and sell,
though.
Approximately how much will the company lose (cost) this year based on the estimates and your
calculations?

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SCM 300 – ONLINE LAB EXERCISE #4
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For help see Module 06 PowerPoint Slides / Problem Sets
Solved problem videos also available

SCM 300 – ONLINE LAB EXERCISE #4
STUDENT VERSION
YOU MUST SHOW YOUR WORK TO RECEIVE CREDIT
PART 3: Square Root Rule
A company presently has 4 warehouses.
Each carries 4,000 units of inventory, which meets demand at a 2.5%
stockout rate.
8.
(2 POINTS)
If the company decides to downsize and keep only 3 warehouses, how many units of inventory will
the company need to carry at each of the three warehouses?
Assume they will continue to pursue a 2.5%
stockout rate.