Daily demand is normally distributed with mean of 1000 and standard deviation of
ID: 447296 • Letter: D
Question
Daily demand is normally distributed with mean of 1000 and standard deviation of 200. lead time is 4 days. What is the expected demand during lead time? Find the ROP consistent with a 95% service level. What is the safety stock component of the ROP in (b)? Daily demand is normally distributed with mean of 20 and variance of 4. lead time is 2 days, a. What is the expected demand during lead time? Find the ROP consistent with a 95% service level. What is the safety stock component of the ROP in (b)? Expected demand during lead lime is 100. Standard dev iation of demand during lead.time is 20. lead time is 2 days. Find the ROP consistent with a 97.72% service level. What is the safety stock component of the ROP in ?Explanation / Answer
Mean = 1000
Standard Deviation = 200
Lead Time = 4 days
a)
Expected demand during lead time = Mean Demand * Lead time = 1000*4 = 4000
b)
ROP = Demand during lead time + Safety stock
Z @ 95% = 1.64
Safety Stock = z* Standard Deviation * Sqrt(Lead time) = 1.64*200*Sqrt(4) = 656
ROP = 4000 + 656 = 4656 units
c)
safety Stock = 656 units
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