Problem 12-19 (Algo)

Given this information:

Expected demand during lead time = 280 units

Standard deviation of lead time demand = 16 units

Use Table.

Determine each of the following, assuming that lead time demand is distributed normally: a. The ROP that will provide a risk of stockout of 1 percent during lead time. (Round your answer to the nearest whole number.)

b. The safety stock needed to attain a 1 percent risk of stockout during lead time. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

c-1. Would a stockout risk of 2 percent require more or less safety stock than a 1 percent risk?

multiple choice 1

• More

• Less

c-2. Would the ROP be larger, smaller, or unaffected if the acceptable risk were 2 percent instead of 1 percent?

multiple choice 2

• Smaller

• Unaffected

• Larger