Weekly demand for corn tortillas at Big Truck Tacos is normally distributed with a mean of 1500 and a standard deviation of 300. Marco's takes one and one half weeks to supply a Big Truck order
Big Truck is targeting a CSL of 95 percent and monitors its inventory continuously. How much safety inventory of corn tortillas should Big Truck carry? What should their ROP be?
What will be an ideal response?
Answer:
ss = Fs-1(CSL) × σL
= NORMSINV(0.95) × 300( )
= 470.87 ≈471
ROP = DL + ss
= 1500(1.5) + 471
= 2721
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