Question
The daily demand of a product can be specified by a normal distribution. Its average daily demand is 250 units with a standard deviation of
The daily demand of a product can be specified by a normal distribution. Its average daily demand is 250 units with a standard deviation of 200 units. The delivery lead-time of this product is also normally distributed with an average of 5 days and a standard deviation of 5 days. a) What are the safety stock and reorder point for a 90 percent service level? b) If the manager places an order of 5000 products whenever the inventory drops below 2500 units, i. what is the chance stockout will occur before arrival of the order placed? ii. what is the expected number of unit shortage in each inventory cycle? iii. What is demand Fill Rate? c) What are the Annual Total costs?
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