Impact of Reducing Lead Time and Forecast Error (Example 12-6) Weekly demand for white shirts at Target store is normally distributed with a mean of 2,500 and a standard deviation of 800. The replenishment lead time from the current supplier is 9 weeks. Unit cost of a shirt is $20. Input Demand per period (week), D= 2500 shirts Standard deviation of demand, D= Change standard deviation of demand in Cell D8 Replenishment lead time, L= and Lead time in Cell D9 to see impact on Safety inventory calculated in Cell D18 Desired cycle service level, CSL= weeks 0.95 Solution Intermediate Calculation Mean demand during lead time DL= SD of demand during lead time L= Result Required safety inventory, SS= ss(CellD18)=NORMSINV(CSL)L Cost of shirt inventory at 9 weeks Cost of shirt inventory at 1 weeks Inventory savings or reduce lead time Cost of shirt inventory at 9 weeks with Std dev of 800 Cost of shirt inventory at 9 weeks with std dev at 400 Inventory savings due to better forecasting Unit cost $20 \$0 \$1 ROP=SS+DL