Question: Bell computers purchases IC chips from a supplier. The supplier promises an average lead time of ten days with a standard deviation of 2 .

Bell computers purchases IC chips from a supplier. The supplier promises an average lead time of ten days with a standard deviation of 2.5 days. Based on past Bell has estimated that daily demand is normally distributed with a mean of 19.2 and a standard deviation of 4.5.
1. If Bell wants to maintain a service level of 97% how much safety stock should they hold? What is the reorder point?
2. If Bell wants to hold 5 days of inventory as safety stock what will their service level be?

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