How much safety stock provides


Problem: Wendy's Cupcakes stocks a high volume item that has a normally distributed demand during the reorder period. The average daily demand is 80 units, the lead time is 5 days, and the standard deviation of demand during the reorder period is 6. a) How much safety stock provides a 99% service level to Wendy's? b) What should the reorder point be? c) How do safety stock and reorder points support an effective inventory management strategy for businesses like Wendy's Cupcakes?

 

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