Thomas' Bike Shop stocks a high volume item that has a normally distributed demand during lead time. The average daily demand is 70 units, the lead time is 4 days, and the standard deviation of demand during lead time is 15
(a) How much safety stock provides a 95% service level to Thomas?
(b) What should the reorder point be?
(a) SS = 1.65 × 15 = 24.75 units or 25 units
(b) ROP = (70)4. + 25 = 305 units.
Business
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