Question: Suppose that the average lead time for bicycle tyres is 4 weeks and a standart deviation of 4 days. There is a penalty cost of

Suppose that the average lead time for bicycle tyres is 4 weeks and a standart deviation of 4 days. There is a penalty cost of delaying production of OMR 350 per unit per day for each item that is not available when needed. If the item arrive ahead of schedule, an inventory holding cost of OMR6 per unit per day is incurred.

a-How much time should be added to the average lead time to protect against lead time risk?

b-How many days before their production start should send their purchase orders to their suppliers?

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