Daily demand for a product is normally distributed with a mean of 200 units and a standard deviation of 20 units. The firm currently uses a reorder point system, with a lead time of 4 days
(a) What safety stock provides a 50% service level?
(b) What safety stock provides a 90% service level?
(c) What safety stock provides a 99% service level?
Standard deviation during lead time is 20 ? = 40 units. Z is 0 for 50% service level, 1.28 for 90%, and 2.33 for 99%. The resulting safety stocks are:
(a) 0, (b) 51.2, and (c) 93.2.
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