The medical staff on Shudder Island uses an average of 60 vials of thorazine every day. This demand is normally distributed with a standard deviation of 15 vials. Since this is an important item, they have decided on a 98% service level. Ferries run infrequently, so the lead time for delivery is 12 days on average with a standard deviation of 2 days. Lead time is also normally distributed.
a. What is the expected demand during lead time?
b. What is the standard deviation of demand during lead time?
c. What is the average safety stock?
d. What is the reorder point?
e. If the company desired to lower the reorder point, which of these initiatives would lower it by the greatest amount - reducing the lead time by 10%, reducing the standard deviation of lead time by 10%, or reducing the service level by 10%?

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The Answer of The medical staff on Shudder Island uses an average of 60 vials of thorazine every day. This demand is normally distributed with a standard deviation of 15 vials. Since this is an important item, they have decided on a 98% service level. Ferries run infrequently, so the lead time for delivery is 12 days on average with a standard deviation of 2 days. Lead time is also normally distributed.
a. What is the expected demand during lead time?
b. What is the standard deviation of demand during lead time?
c. What is the average safety stock?
d. What is the reorder point?
e. If the company desired to lower the reorder point, which of these initiatives would lower it by the greatest amount - reducing the lead time by 10%, reducing the standard deviation of lead time by 10%, or reducing the service level by 10%?

The Medical Staff on Shudder Island Uses an Average of 60