Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 43

PM Computers assembles personal computers from generic components. It purchases its color monitors from a manufacturer in Taiwan; thus, there is a long and uncertain lead time for receiving orders. Lead time is normally distributed, with a mean of 25 days and a standard deviation of 10 days. Daily demand is also normally distributed, with a mean of 2.5 monitors and a standard deviation of 1.2 monitors. Determine the safety stock and reorder point corresponding to a 90% service level.