The manager of the Quick Stop convenience store (which never closes) sells 24 si

Question

The manager of the Quick Stop convenience store (which never closes) sells 24 six packs of Fizzy soda each day. Order costs are $8.00 per order, and Fizzy soda costs $4.00 per six-pack. Holding costs are $1 per six pack. Orders arrive five days from the time they are placed.

A) If lead time is constant and demand is normally distributed with a standard deviation of 5 six packs, what      safety stock should Quick Stop carry for a 99% service level (round to nearest whole number)? Round to the nearest whole number.

B) If demand is constant and lead time is normally distributed with a standard deviation of 2 days, what safety stock should Quick Stop carry for a 95% service level (round to the nearest whole number)?

C) If demand varies with a standard deviation of 5 six packs and lead time varies with a standard deviation of 2 days and the Quick Stop carries safety stock for a 98% service level, what is the reorder pont (round to the nearest whole number)?

Explanation / Answer

Express the second principal normal stress.

Here, second principal normal stress is .

Substitute for , for , and for .

Hence, the second principal normal stress is .

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