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e. Example 1: A local grocery store sells FZZ Diet Pop. The lead time demand for...

e. Example 1: A local grocery store sells FZZ Diet Pop. The lead time demand for FZZ Diet Pop is normally distributed with a mean of 200 cases per day and a standard deiviation of 40 cases. Assume LT = 1 day. What level of customer service (SL) FZZ can provide if it keeps a safety stock of 50 cases? What about stockout risk? i. From part (a) above, the store manager noticed that the service level obtained in part (a) would not be sufficient in meeting the store’s target service level of 95%.

What level of safety stock (SS) would the grocery have to carry to maintain 95% service level?

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Safety stock refers to extra stock level that is maintained in order to eliminate the risk of shortage of stocks because supply and demand may vary. Safety stock is calculated based on the lead time and demand

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