Question: 3. (15 points) Based on available information, daily demand for CD-ROM drives averages 10 units (normally distributed), with a standard deviation of 2.2 drives. The

3. (15 points) Based on available information,

3. (15 points) Based on available information, daily demand for CD-ROM drives averages 10 units (normally distributed), with a standard deviation of 2.2 drives. The lead time is one week (7 days). Management wants a 96% service level. (a) (6 points) Generally speaking, what is the purpose of carrying the safety stock? In this problem, how many drives should be carried as safety stock? (b) (6 points) In general, how does re-order point (ROP) help us make inventory management decisions? What is the ROP in this problem? (c) (3 points) Suppose that the management has chosen ROP=70. What is the service level this reorder point can guarantee

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