An automobile company has 4 showrooms and a distribution center in a city. The demand at each showroom is supposed to be independent and normally distributed. At each showroom, the average demand is estimated 10 cars per week and the standard deviation of demand is 3 cars per week. The company uses Re-Order Point method (continuous review) inventory management model. The lead time is I week. The service level is 1c/100 percent, where k is the four last digits of your student ID. For example, if your student ID is 20051547, then k = 1547 and the service level is 15.47%.

a. If the cars are stored at each showroom, that is the re-order point at each showroom? What is the total safety stock of 4 showrooms?

b. If the cars are stored at the distribution center, what is the re-order point at the distribution center? What is the safety stock in this situation?

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Average daily demand 5 Standard deviation of daily ... View the full answer