Demand for a Product Is Relatively Constant at Five Units

question 83

Essay

Demand for a product is relatively constant at five units per day. Lead time for this product is normally distributed with a mean of ten days and a standard deviation of three days.
a. What reorder point provides a 50% service level?
b. What reorder point provides a 90% service level?
c. If the lead time standard deviation can be reduced from 3 days to 1, what reorder point now provides 90% service? How much is safety stock reduced by this change?

---

Definitions:

Batch

A collection or group of goods or items that are processed or produced at the same time.

Daughters

Female offspring in relation to their parents.

Current

The flow of electric charge through a conductor or the flow of water in a stream or ocean.

Russian

Pertaining to Russia, its people, culture, or language, which is the most widely spoken of the Slavic languages.