In Example 5.8, suppose the lead time is reduced from 1 week to 4 days.

What R should be used? What would the resulting safety stock be?

Example 5.8 A retail outlet orders item A1 from a regional DC. The item costs $100 per unit, the order cost is $1000 per order, and the discount rate used for holding is 25%. In addition, it is desired that the service level is 95%. Annual demand for the item is normally distributed with a mean of 4000 and standard deviation of 1200. Replenishment lead time is 1 week. The outlet wishes to develop the (Q, R) model using the EOQ.