In a Q system, the demand rate for strawberry ice cream is normally distributed,

Question

In a Q system, the demand rate for strawberry ice cream is normally distributed, with an average of 290 pints per woek. The lead time is 8 weeks. The standard deviation of weekly demand is 10 pints. Refer to the standard normal table for 2-values a. The standard deviation of demand during the 8-week lead time is 28 pints. (Enter your response rounded to the nearest whole number.) b. The average demand during the 8-week lead time is 2320 pints. (Enter your response as an integer) c. The reorder point that results in a cycle-service level of 98 percent ispints. (Enter your response rounded to the nearest whole number.)

Explanation / Answer

Average weekly demand d = 290 pints

Lead Time (L) = 8 weeks

Standard deviation of weekly demand  d = 10 units

a) Standard deviation of lead time demand LTD = d*L = 10*8 = 28 pints

b) Average demand during lead time D = d*L = 290*8 = 2320 pints

c) Service level = 98 % => z = 2.054

ROP = D+Safety Stock (SS) = D+z*LTD = 2320+(2.054*28) = 2378 pints

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