2. We know that Blue Pad Company’s lead time L is one week, and demand rate...
2. We know that Blue Pad Company’s lead time L is one week, and demand rate is 100 units per week. Compute the amount of Safety Stock and new ROP assuming that the company desires a 98% service level. Standard deviation of demand over lead time is eight.
Homework Answers
Solution :
Given that Demand d = 100 units , Lead time L = 1 week , Standard Deviation s = 8
=> K = 98% then area Z = 2.05
=> safety stock ROP = d*L + (Z * sqrt(s))
= 100*1 + (2.05*sqrt(8))
= 106 (nearest integer)
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