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Question
Demand for a product is relatively constant at five units per day. Lead time for this product is normally distributed with a mean of ten days and a standard deviation of three days.
(a) What reorder point provides a 50 percent service level?
(b) What reorder point provides a 90 percent service level?
(c) If the lead time standard deviation can be reduced from 3 days to 1, what reorder point now provides 90 percent service? How much is safety stock reduced by this change?
Answer
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Weight Day
Package 1
Package 2
Package 3
Package 4 Monday
23
22
23
24 Tuesday
23
21
19
21 Wednesday
20
19
20
21 Thursday
18
19
20
19 Friday
18
20
22
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Answer:
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