Question: 6. Safety Stock (9 points) a. (4 points) Using the fixed-time period inventory model, and given an normally distributed daily demand of mean 120 units

 6. Safety Stock (9 points) a. (4 points) Using the fixed-time

6. Safety Stock (9 points) a. (4 points) Using the fixed-time period inventory model, and given an normally distributed daily demand of mean 120 units and standard deviation 10 units, 1 week between inventory reviews, 3 days for lead time, 113 units of inventory on hand, a target service level of 98%, what is the optimal order quantity? b. (5 points) A company wants to determine its reorder point (ROP) for maintaining a 96% product availability rate. The market demand during lead time shows a discrete distribution pattern as follows: Demand Quantity Probability 80 0.15 90 0.15 100 0.35 110 0.17 120 0.15 130 0.03 What is the safety stock that the company should hold? (Hint: different from ROP) If the company reduces the target to an 80% availability rate, what will be the safety stock

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