Case Problem

[Page 769 ( continued )]

T HE T EXANS S TADIUM S TORE

The Fort Worth Texans have won three Super Bowls in the past 5 years, including two in a row the past 2 years . As a result, sportswear such as hats, sweatshirts, sweatpants, and jackets with the Texans logo are particularly popular in Texas. The Texans operate a stadium store outside the football stadium where they play. It is near a busy highway , so the store has heavy customer traffic throughout the year, not just on game days. In addition, the stadium holds high school or college football and soccer games almost every week in the fall, and it holds baseball games in the spring and summer. The most popular single item the stadium store sells is a blue and silver baseball cap with the Texans logo embroidered on it in a special and very attractive manner. The cap has an elastic headband inside it, which automatically conforms to different head sizes. However, the store has had a difficult time keeping the cap in stock, especially during the time between the placement and receipt of an order. Often customers come to the store just for the hat; when it is not in stock, customers are visibly upset, and the store management believes they tend to go to competing stores to purchase their Texans clothing. To rectify this problem, the store manager, Jenny Jones, would like to develop an inventory control policy that would ensure that customers would be able to purchase the cap 99% of the time they asked for it. Jenny has accumulated the following demand data for the cap for a 30-week period:

Week	Demand	Week	Demand	Week	Demand
1	38	11	28	21	52
2	51	12	41	22	38
3	25	13	37	23	49
4	60	14	44	24	46
5	35	15	45	25	47
6	42	16	56	26	41
7	29	17	62	27	39
8	46	18	53	28	50
9	55	19	46	29	28
10	19	20	41	30	34

(Demand includes actual sales plus a record of the times a cap has been requested but not available and an estimate of the number of times a customer wanted a cap when it was not available but did not ask for it.)

The store purchases the hats from a small manufacturing company in Jamaica. The shipments from Jamaica are somewhat erratic, with a lead time anywhere between 10 days and 1 month. The following lead time data (in days) were accumulated during approximately a 1-year period:

---

[Page 770]

Order	Lead Time	Order	Lead Time
1	12	11	14
2	16	12	16
3	25	13	23
4	18	14	18
5	10	15	21
6	30	16	19
7	24	17	17
8	19	18	16
9	17	19	22
10	15	20	18

In the past, Jenny has placed an order whenever the stock got down to 150 caps. To what level of service does this reorder point correspond ? What would the reorder point and safety stock need to be to attain the desired service level? Discuss how Jenny might determine the order size for caps and what additional, if any, information would be needed to determine the order size .