Case: Tasty Treats Case Study Analysis
Alternative Safety Stock Amounts
The safety stock refers to the additional quantity of units or cases held in the inventory for the purpose of reducing the exposure that the unit or case would be out of the stock. The calculations of the safety stock are based on 95 percent and 99 percent service levels. For the 95 percent service level, the amount of safety stock and safety stock carrying cost is 332.62 and 1222.41 respectively whereas for the 99 percent service level, the amount of safety stock and safety stock carrying cost is 469.71 and 1726.19.
Recommendations
Based on the financial analysis, Tasty Treats is recommended to increase the order quantity to 3000 units so that it would be able to enjoy the quantity discounts from suppliers. In doing so, the company would be able to reduce the annual total acquisition cost. With the significant increase in the order quantity, the company should lower the number of orders for each year in order to equalize the demand on an annual basis.The real-time analysis of the level of a stock involves the QuickBooks – a computerized system to assess the level of stock. Additionally, the company is recommended to focus on a continuous or periodic inventory review model to manage its inventory effectively.
Appendix A – Total Acquisition Cost (TAC)
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