Determine the desired safety stock


Response to the following problem:

Scott Stereo orders Dutch brand cassette tapes once every three weeks. Weekly demand for the T-60 format is approximately normal with a mean of 200 units and a standard deviation of 30 units. The tapes cost Scott $0.65 each and sell for $1.25. Lead time for delivery is one week. Scott desires a safety stock that will give the store a cycle service level of 98%. If Scott's inventory level for the Dutch T-60 tapes is at 230 units when it places an order, determine:

a. The order quantity for the tapes.

b. The desired safety stock.

 

 

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Cost Accounting: Determine the desired safety stock
Reference No:- TGS02119397

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