Question 5, (4 Marks):

Ottawa's Fairmont hotel distributes, on average, 650 bath towels per day to their guests at the pool and within their hotel rooms. This demand is normally distributed with a standard deviation of 54 towels per day, depending on occupancy. The laundry service firm (3rd party contract), promises a 2 day lead time to wash and return/restock the towels when needed. The hotel aims for a 98% service level to its customers to ensure satisfied customers.

Using our QUAL8310 eText, visit Chapter 12, and navigate to the sub-chapter topic called "Other Probabilisitc Models". Read through this very brief topic and apply the equation from 12-15 that is applicable to this Question's scenario involving customer demand overall, and the variables provided. i.e. study and apply (similar) to "Example 12" found in our etext ... and answer the following:

1. a) Determine the ROP for this hotel?
2. b) What should be the safety stock quantity in order to sustain the service level?

(1 2-15) ROP : (Average daily demand X Lead time in days) + ZaaT where 0.1m = Standard deviation of demand during lead = 17a i/Lead time and 0,1 : Standard deviation of demand per day Example 12 ROP for Variable Demand and Constant Lead Time The average daily demand for Apple iPhones at a Circuit Town store is 15, with a standard deviation of ve units. The lead time is constant at two days. Find the reorder point if management wants a 90% service level (i.e., risk stockouts only 10% of the time). How much of this is safety stock? Approach Apply Equation (12-15)\" to the following data: Average daily demand (normally distributed) = 15 Lead time in days (constant) : 2 Standard deviation of daily demand : ad : 5 Service level : 90% Solution From the normal table (Appendix ID). We derive a Zvalue for 90% of 1.2%. Then: ROP : (15 units x 2 days) + Zing/Lead time = 30+1,2s(5)(i) = 30 + 1.28 (5) (141) = so + 9.02 = 39.02 g 39 Thus. safety stock is about nine iPhones. 2E