PROBLEM SITUATION #4 Davidson Hardware stocks an expensive composite-based plaster patching compound, currently classified A which is controlled by continuous review. Demand is variable, with an average of 6 pounds per week and a standard deviation of 2 pounds per week. Lead time is constant at one week. The firms current management of the product calls for a safety stock of one (1) pound.

1. The current reorder point for this product is ______ pounds.

a. 5

b. 7

c. 6

d. 8

e. none of the above

2. The current cycle-service level is ______.

a. 0.5

b. 1.29

c. 0.8413

d. 0.6915

e. none of the above

3. If Davidson wanted to change the safety stock so that the cycle-service level became 90 percent, the new reorder point would be ______.

a. 6

b. 9.3

c. 8.6

d. 8

e. none of the above