Problem: Western Outfitters is a prominent manufacturer of casual denim clothing in Durango, Colorado. The denim used daily in their manufacturing process to produce jeans is normally distributed with an average of 3,000 yards of denim and a standard deviation of 600 yards. The lead time to receive an order of denim cloth from Long Island Textiles, their primary supplier, is a constant six days.
Q1. Determine the safety stock and reorder point if Western Outfitters wishes to limit the probability of a stockout and work stoppage to a minimum of 5%.
Q2. Determine the service level provided by a safety stock level of 2,000 yards.