Problem: A company produces and stocks computer printers in its finished-goods warehouse. These ‘demand during lead time’ (DDLT) historical data are believed to be representative of future demand for one printer model:
|
Actual DDLT
|
Frequency
|
Actual DDLT
|
Frequency
|
|
0-29
|
0
|
70-79
|
0.25
|
|
30-39
|
0.10
|
80-89
|
0.10
|
|
40-49
|
0.10
|
90-99
|
0.05
|
|
50-59
|
0.15
|
100-109
|
0.05
|
|
60-69
|
0.20
|
110-120
|
0
|
Calculate (a) the order point AND (b) the safety stock for EACH of the following scenarios:
Q1. If at least a 90% service level is to be provided for these printers.
Q2. If the DDLT for the printer is actually normally distributed with a mean of 65 and a standard deviation of 10, and a service level of 90% is to be provided for these printers.
Q3. If the lead time for these printers is so stable that the lead time can be assumed to be a constant 6.5 days, the demand per day is normally distributed with a mean of 10 and a standard deviation of 2, and at least a service level of 90% is to be provided for these printers.