Question: If an alternative transportation mode reduces the average lead time to one week but, due to its unreliability, means an increase in LT std. dev.
If an alternative transportation mode reduces the average lead time to one week but, due to its unreliability, means an increase in LT std. dev. to 0.5, would you expect to see Safety Stock increase or decrease, why?
Previous question: The home appliance department of a large department store is using inventory models to control the replenishment of a particular model of Microwave ovens. The store sells an average of 25 ovens each week. Weekly demand follows a normal distribution with a standard deviation of 7. The store orders replenishment in fixed order quantities of 58 ovens. The replenishment lead time is fixed two weeks (no variability, that is LT std. dev. =0). The store targets at providing a service level of 91%. What are the values of DDLT std. dev., z and safety stock? Demand: 58, Std Dev: 7 and LT 14 days
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