James, the Floor Manager at a Local Store of a National

question 91

Essay

James, the floor manager at a local store of a national home improvement chain evaluates their inventory system. He chooses the patio blocks to be examined as the first item. The historical supply and demand data for this item indicates a constant lead time of 16 days. Demand per day (d) is normally distributed with a mean demand of 2000 per day and standard deviation of 240 per day. He plans to set the service level at 90 percent during lead time.
a.What is the average demand during lead time?
b.What is the amount of safety stock of blocks he should keep on hand?
c.What is the order point he should use?

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