Question
Weekly demand for area rugs at a Pottery Barn distribution center (DC) is normally distributed with a mean of 81 units/day and standard deviation of
Weekly demand for area rugs at a Pottery Barn distribution center (DC) is normally distributed with a mean of 81 units/day and standard deviation of 11 units/day. Pottery Barn orders rugs at a unit cost of $699. The annual cost of carrying inventory at the store is 23% of the purchase cost per unit per year. It takes 32 days to receive a delivery. The store reviews its inventory continuously. Assume 52 weeks/year, 7 days/week and 364 days/year. Compute the safety stock needed to maintain a cycle service level of 98%. - Carry your calculations to at least 3 decimal places. - Round your answer to the nearest tenth of a unit (one decimal place). A table of z-values is provided for your reference.
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