Essay
Keith, an operations manager at a chemical company is attempting to set a safety stock level for a key ingredient that is used in their most powerful insecticide product. He believes that demand during lead time for this ingredient is normally distributed based on past data. In addition, he believes that future use is accurately depicted by these historical demands during lead-time data (in gallons): 55, 75, 75, 70, 80, 60, 50, 70, 60, and 85. He estimates the standard deviation of demand during the lead time to be 8.5 gallons.
a.What is the average demand during the lead time for this key ingredient?
b.What is the safety stock needed to provide a 95 percent service level?
c.What is the reorder point the company should use?
Correct Answer:
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a.
L = (55 + 75 + 75 + 70 + 80...View Answer
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Correct Answer:
Verified
L = (55 + 75 + 75 + 70 + 80...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
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