Question: 6-3 INVENTORY DECISIONS - VARIABLE DEMAND lGiven this information: i. Expected demand during lead time = 600 units. ii. Standard deviation of lead time demand

6-3 INVENTORY DECISIONS - VARIABLE DEMAND lGiven this information: i. Expected demand during lead time = 600 units. ii. Standard deviation of lead time demand = 60 units. Determine each of the following. assuming that lead time demand is distributed normally: a. The safety stock needed to attain a 1 percent risk of stockout during lead time. b. The reorder point [RDPI that will provide a risk of stockout of 1 percent during lead time. c. Would a stockout risk of 2 percent require more or less safety stock than a 1 percent risk? d. Would the ROP be larger. smaller. or unaffected if the acceptable risk was 2 percent instead of 1%? Explain
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
