A cigar company stocks Cuban cigars that have variable delivery times due to the difficulty of importing the product. Delivery time is normally distributed with a mean of 6 weeks and a standard deviation of 2 weeks. Average demand is also normally distributed with a mean of 200 cigarettes per week and a standard deviation of 25 cigarettes.
a. For a 98% service level, what is the ROP?
b. What is the ROP for a 90% service level?
c. Explain what these two levels of service mean. Which is preferable?