Problem A: A company makes T-shirts used by local gyms. Fabric is the primary raw material. Demand is onstant but the lead time for getting fabric can vary.
They need - 100 bolts/day
Lead time from their primary vendor - 10 days
Standard deviation of lead time - 1 days
The desired level of services is - 97%
a. What amount of safety stock is appropriate?
b. What is the reorder point for this item? (Round up if necessary.)
Problem B: Ice Dreamery makes various kinds of ice cream, including walnut fudge. The demand for walnut fudge varies, based on weather and other factors. The company wants to determine the reorder point for the walnuts.
Average pounds of walnuts needed - 20 pounds per day
Standard deviation of demand - 5 pounds
Customer service level desired - 90%
Lead time - 4 days
a. What amount of safety stock is appropriate?
B. Determine the reorder point. (Round up if necessary.)
Problem C: a. If the stock out risk level is set at 7%, what's the z factor? Two decimals.
b. If z = 2.17, what's the risk of a stockout? (Express as a percentage. Two decimals.