3 Suppose that the EOQ is 100, average annual demand is 1,000 units, and the lead time demand is a random variable having the distribution shown in Table 15.

a What value of SLM1 corresponds to a reorder point of 25?
b If we wanted to attain a 95% value of SLM1, what reorder point should we choose?
c If we wanted an average of at most two stockouts per year, what reorder point should we choose?

Transcribed Image Text:

TABLE 15 Lead Time Demand 10 Probability 1 6 15 1 4 20 25 1 12 30 1