Based on avaiable information ,lead time demand for cd rom drives a averages 250

Question

Based on avaiable information ,lead time demand for cd rom drives a averages 250 Unites normally distributed, with a standard deviation of 25 drives. Management wants a 98% service level . How many drives should be carried as safety stock wht is appropriate ROP ? Please show work using excel .. Based on avaiable information ,lead time demand for cd rom drives a averages 250 Unites normally distributed, with a standard deviation of 25 drives. Management wants a 98% service level . How many drives should be carried as safety stock wht is appropriate ROP ? Please show work using excel .. Please show work using excel ..

Explanation / Answer

The Z value for 98% service level is equal to 2.054

a) Safety Stock

Safety Stock = (Z value for 98% service level) * standard deviation

=> 2.054 * 25

=> 51.25

Hence the number of drives should be kept for safety stock is equal to 52

b)

ROP (Re-ordering point) = Mean + Safety Stock

=> 250 + 51.35

=> 301.35

approximately 302

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