Question

Given this information:
Expected demand during lead time = 285 units
Standard deviation of lead time demand = 16 units
Use Table.
Determine each of the following, assuming that lead time demand is distributed normally:

a. The ROP that will provide a risk of stockout of 1 percent during lead time. (Round your answer to the nearest whole number.)

ROP             units
  
b. The safety stock needed to attain a 1 percent risk of stockout during lead time. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

Safety stock             units

c-1. Would a stockout risk of 4 percent require more or less safety stock than a 1 percent risk?

• More

• Less

c-2. Would the ROP be larger, smaller, or unaffected if the acceptable risk were 4 percent instead of 1 percent?
  

• Unaffected

• Larger

• Smaller

Answer 1