I. INSTRUCTIONS: Solve the following problems:

1. The daily demand of a product can be specified by a normal distribution. Its average daily demand is 500 units with a

standard deviation of 25 units. The delivery lead time of this product is also normally distributed with an average of

10 days and a standard deviation of 3 days.

a) What will be the safety stock and reorder point for a 95 percent service level?

b) What will be the safety stock and reorder point should the company decides to increase the service

level to 99%?

2. Lindner Congress Bookstore sells books to college students. The demand a specific book has a normal distribution

with an average daily demand of 25 units and a standard deviation of 5 units per day. The lead time for this

calculator is very stable at 7 days. Compute for:

a) the standard deviation of demand during lead time

b) the safety stock and statistical reorder point that result in 2.5% stockouts.

3. The figures below show the demand for a product for the past three (3) months.

January = 550 units

February = 350 units

March = 450 units

The average leadtime is 9 days with a standard deviation of 2 days.

a) the safety stock and ROP at a service level 95%

b) the additional safety stock/ROP when the service level is raise to 97.5%

4. Paris Store stocks a part that has a normal distribution demand pattern during the reorder point. The average

demand during leadtime is 1,500 units and a standard deviation during leadtime of 100 units.

a) What will be the safety stock and reorder point that will result to a 5% stockouts?

b) What will be the safety stock and reorder point that will result to a 10% stockouts?

please i need answer asap