Solved: What recommendations should Rachel make in her

presentation to Tasty

What recommendations should Rachel make in her presentation to Tasty Treats management?

Tasty Treats is a distributor of candy and snack products. The company carries over 5,000
items in inventory but has never had anyone knowledge of inventory management policies.
Instead it has relied on rules of thumb and judgment to determine order quantities and safety
stock levels. Bill Jones, COO and Jim Busfield, CEO have assigned Rachel Atkins, a student
intern, to use her knowledge of inventory management to make recommendations to
management. They specifically asked her to look at one product-Chocolate Chewies. Currently
Tasty Treats sells an average of 100 cases per day on each of the 300 days it is open. The firm
orders every 10 days because it takes 10 days to get Chocolate Chewies from the supplier. The
firm also attempts to keep safety stock of 200 units. Rachel gathered the following information
for her analysis of Chocolate Chewies:

Product Cost: $25.00 per case

Ordering Cost: $100 per order

Inventory Carrying Cost: 15 percent

Standard deviation of demand = 8 cases per day

Standard deviation of lead time = 2 days

The sales representative for the supplier also informed Rachel that Tasty Treats could get a
reduced price of $24.50 if it ordered at least 3,000 cases per order.

Finally the sales staff informed Rachel that they thought a 99% service level was appropriate.
Bill and Jim suggested she also consider a 95% service level.

ANSWER
https://solvedquest.com/what-recommendations-should-rachel-make-in-her-presentation-to-
tasty/

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