Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 32

The Uptown Bar and Grill serves Rainwater draft beer to its customers. The daily demand for beer is normally distributed, with an average of 18 gallons and a standard deviation of 4 gallons. The lead time required to receive an order of beer from the local distributor is normally distributed, with a mean of 3 days and a standard deviation of 0.8 day. Determine the safety stock and reorder point if the restaurant wants to maintain a 90% service level. What would be the increase in the safety stock if a 95% service level were desired