Given this information: Expected demand during lead time = 330 units Standard de

Question

Given this information: Expected demand during lead time = 330 units Standard deviation of lead time demand = 20 units Use Table. (Z Table) Determine each of the following, assuming that lead time demand is distributed normally:

The ROP that will provide a risk of stockout of 1 percent during lead time. (Round your answer to the nearest whole number.)

The safety stock needed to attain a 1 percent risk of stockout during lead time. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

The ROP that will provide a risk of stockout of 1 percent during lead time. (Round your answer to the nearest whole number.)

Explanation / Answer

Solution-

Demand during Lead time, D*L = 330 units

Standard Deviation, Std Dev of lead time demand = 20 units

Service level = 1 - stockout risk% = 1 - 1% = 99%

Z for the service level of 99% = 2.33

ROP = D*L + Z*Std Dev of lead time demand = 330 + 2.33*20 = 376.6 units

Safety Stock = Z*std dev of lead time demand = 2.33*20 = 46.6 units

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