Question: Talbot Industries is evaluating its service level policy for a product that is considered critical to customers. Demand for the item averages 1 3 5

Talbot Industries is evaluating its service level policy for a product that is considered critical to customers. Demand for the item averages 135 units per day and the lead time from the supplier of the item averages 5 days. An analysis of demand and lead time patterns has shown that the standard deviation of demand during lead time is 145 units. The existing service level policy allows for a stockout probability of 15 percent during the replenishment cycle.

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