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Daily Demand for a Product Is Normally Distributed with a Mean

question 60

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Daily demand for a product is normally distributed with a mean of 1,200 units and a standard deviation of 120 units. The firm currently uses a reorder point system with a lead time of 8 days.
A) What safety stock provides a 49 percent service level?
B) What safety stock provides a 98 percent service level?
C) Does doubling the service level double the amount of safety stock required? Does it double the ROP?


Definitions:

Warrants

Legal documents that grant the holder the right to buy or sell a particular asset at a specific price before a certain date.

Corporation by Estoppel

A principle where a company is treated as if it were legally incorporated, due to its conduct, even if it failed to complete the formal incorporation process.

Defectively Organized

Pertains to an entity or group that has not been set up correctly according to legal requirements or standards.

Shareholder Manager

An individual who both owns shares in a corporation and actively manages or participates in its governance and operations.

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