Mountain Mouse makes freeze-dried meals for hikers.
One of Mountain Mouse's biggest customers is a sporting goods superstore. Every 5 days, Mountain Mouse checks the inventory level at the superstore and places an order to restock the meals. These meals are delivered by UPS in 2 days. Average demand during the reorder period and order lead time is 100 meals, and the standard deviation of demand during this same time period is about 20 meals.
a. Calculate the restocking level for Mountain Mouse. Assume that the superstore wants a 90% service level. What happens to the restocking level if the superstore wants a higher level of service-say, 95%?
b. Suppose there are 20 meals in the superstore when Mountain Mouse checks inventory levels. How many meals should be ordered, assuming a 90% service level?