Question

Chicago's Hard Rock Hotel distributes a mean of 1 comma 200 bath towels per day to guests at the pool and in their rooms. This demand is normally distributed with a standard deviation of 105 towels per day, based on occupancy. The laundry firm that has the linen contract requires a 2-day lead time. The hotel expects a 99% service level to satisfy high guest expectations.

a) What is the reorder point?

b) What is the safety stock?

Answer 1