Problem 13-19 Determine each of the following, assuming that lead time demand is
ID: 2755369 • Letter: P
Question
Problem 13-19
Determine each of the following, assuming that lead time demand is distributed normally:
The ROP that will provide a risk of stockout of 1 percent during lead time. (Round your answer to the nearest whole number.)
The safety stock needed to attain a 1 percent risk of stockout during lead time. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Would the ROP be larger, smaller, or unaffected if the acceptable risk were 2 percent instead of 1 percent?
Given this information: Expected demand during lead time = 310 units Standard deviation of lead time demand = 30 units Use Table.Determine each of the following, assuming that lead time demand is distributed normally:
Explanation / Answer
A)
risk=1-.01=.99 percent
.99 from Z table=z= 2.33
LT=310, LT=30
ROP= Expected demand in (LT) + ZdLT =310+(30) (2.33)= nearly 380 units
B)
Safety stock = Z dLT= 2.33(30)= nearly 70 units
C.1
Risk is 2
100-.02=.98
0.99 from z table (lead time), z= 2.04
LT=300, LT=30
Safety stock = Z dLT= 2.04(30)= nearly 61.2 units
C 2
ROP= Expected demand in (LT) + ZdLT =310+(30) (2.04)= nearly 371 units
when risk is 2, z, safety stock and ROP are found smaller compared to the previous one.