Demand for walnuts fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution with a mean of 21 gallons per week and a standard deviation of 3.5 gallons per week. The new manager desires a service level of 90%. Lead time is 2 days, and the dairy is open seven days a week. (Hint: work in terms of weeks.)
If an ROP model is used, what ROP will be consistent with the desired service level? How many days of supply are on hand at the ROP, assuming average demand?
If a fixed-interval model is used instead of an ROP model, what order size would be needed for the 90% service level with an order interval of 10 days and a supply of 8 gallons on hand at the order time?