Question: Consider an SKU with expected demand D=100 per week and variance of demand D2=300. Assume that the weekly demand is normally distributed. The replenishment lead

Consider an SKU with expected demand D=100 per week and variance

Consider an SKU with expected demand D=100 per week and variance of demand D2=300. Assume that the weekly demand is normally distributed. The replenishment lead time for this SKU is always 4 weeks. Inventory of this SKU is controlled by a continuous review (s,Q) policy. a. What is the required reorder point that provides a non-stock-out probability of 95% ? b. Now suppose the firm actually reduces the lead time by working with its supplier. Unfortunately, the reduced lead time is not always achieved. In particular, the lead time is 2 weeks for half of the time and 4 weeks for half of the time. What is the required reorder point that provides a non-stock-out probability of 95%

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