Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution with a mean of 24 gallons per week and a standard deviation of 3.3 gallons per week. The new manager desires a service level of 90 percent. Lead time is two days, and the dairy is open seven days a week. (Hint: Work in terms of weeks.)
Use Table B and Table B1.
If an ROP model is used, what ROP would be consistent with the desired service level? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
ROP = _______ gallons
Average weekly demand for ice cream (d) = 24 gallons
Lead time (L) = 2 days or 2/7 weeks
The standard deviation of weekly demand (d) = 3.3 gallons
Service level expectancy = 90%
Z-value corresponding to 90% service level = 1.28
Re-order point (ROP) is given by the formula,
gallons
Hence the re-order point is 9.11 gallons.
Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution
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