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A store manager controls the inventory of digital cameras with a Reorder Point Ordering inventory policy. The ROP is currently set at the value 555 and the lead time has been consistent at 1 week. It's estimated that the weekly demand for digital cameras follows a normal distribution with mean 500 and standard deviation 40. The manager has set a service level target of 95%. Which one of the following actions should be taken to satisfy the service level target?

A) Increase the ROP level by 100 units.
B) Increase the ROP level to 566.
C) Do not change the ROP level since it achieves the target.
D) Reduce safety stock by 45 units.
E) Increase safety stock to 166.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9694713

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