Given this information: Expected demand during lead time = 320 units Standard de

Question

Given this information: Expected demand during lead time = 320 units Standard deviation of lead time demand = 20 units Use Table. Determine each of the following, assuming that lead time demand is distributed normally:

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

b. 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.)

Explanation / Answer

z = 99% = 2.33

ROP = Demand During lead Time + (z* Standard deviation of lead time demand)

ROP = 320 + (2.33*20) = 366.6 = 367 units

Safety stock = (z* Standard deviation of lead time demand) = (2.33* 20) = 46.6 = 47 units

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