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% service level?
b. What reorder point provides a 90% service level?
c. If the lead time standard deviation can be reduced from 3 days to 1, what reorder point now provides 90% service? How much is safety stock reduced by this change?

Question

Quizplus · Accepted Answer

The Answer of 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% service level?
b. What reorder point provides a 90% service level?
c. If the lead time standard deviation can be reduced from 3 days to 1, what reorder point now provides 90% service? How much is safety stock reduced by this change?

Demand for a Product Is Relatively Constant at Five Units