An automobile manufacturer orders a specific fastener from the same supplier every 4 weeks. Lead time is 1 week. The supply chain manager must determine how many fasteners to order. A check of stock reveals 10 boxes on hand, each containing 200 units. Daily usage of the fastener is approximately normal, with a mean of 125 units and a standard deviation of 50. The desired service level is 98%.
Questions:
A) What amount of safety stock is necessary for the fastener?
B) How many boxes (of 200 units each) should be ordered?