A drugstore orders at fixed intervals many of the items it stocks. The store orders a particular

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A drugstore orders at fixed intervals many of the items it stocks. The store orders a particular brand of cold medicine from a wholesale supplier. The store reviews the stock of the medicine every 25 days and places an order. The lead time is 5 days. The daily demand for the cold medicine is approximately normal with a mean of 10 packages per day and a daily standard deviation of 2.5 packages. If the store wants to maintain a service level of 95%:

1. What should the target inventory level be?

2. What is the average amount of safety stock?

3. If the store has 30 packages of cold medicine on hand at reorder time, what should the order quantity be?

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Operations Management Managing Global Supply Chains

ISBN: 978-1506302935

1st edition

Authors: Ray R. Venkataraman, Jeffrey K. Pinto

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