Problem
Annual demand for a particular halogen bulb is 1500 at a business that operates 300 days per year. The cost per order $220 and the holding cost per unit per year is $4.6. If the lead time is 20 days, and demand during lead time follows the empirical distribution given in the following table:
|
# of Units
|
Probability
|
|
55
|
0.05
|
|
70
|
0.1
|
|
85
|
0.25
|
|
100
|
0.2
|
|
115
|
0.25
|
|
130
|
0.1
|
|
145
|
0.05
|
1) What is the average demand during lead time?
2) What is the required safetystock to ensure a 85% service level?
3) For a reorder point of 130 what is the service level?