Question: Question 4. ROP System and Safety Stock (Session #2) Suppose you are managing inventory using a reorder point policy. You find that demand has increased

Question 4. ROP System and Safety Stock (Session

Question 4. ROP System and Safety Stock (Session #2) Suppose you are managing inventory using a reorder point policy. You find that demand has increased and has also become more volatile; specifically, the mean of the weekly demand is 50% higher than before and the standard deviation of it has doubled. Demands from week to week are independent and the weekly demand roughly follows a normal distribution. To deal with the greater demand uncertainty, a faster delivery has been implemented to cut the lead time by half. Assuming you want to maintain the same service level, will the required safety stock be the same as before, higher than before, or lower than before? Please show your reasoning clearly

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