The paper usage at a small copy center is normally distributed with a mean of 5

Question

The paper usage at a small copy center is normally distributed with a mean of 5 boxes of paper per week, and a standard deviation of 0.5 boxes. It takes 2 weeks for an order of paper to be filled by its supplier. What is the ROP to maintain a 99% service level?

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The paper usage at a small copy center is normally distributed with a mean of 5 boxes of paper per week, and a standard deviation of 0.5 boxes. It takes 2 weeks for an order of paper to be filled by its supplier. What is the safety stock to maintain a 99% service level?

Explanation / Answer

1.

B.12

Working note:

ROP = lead time demand + safety stock

ROP = 5*2 + 2.33*.5*2^.5 = 11.65 or 12 units

2.

A.2

Working note:

Safety stock = Z*SD*L^.5 = 2.33*.5*2^.5

Safety stock = 1.65 or 2 units

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