What level of safety stock is appropriate if lead time, Ask an Expert

Management Studies

A service station uses 1,200 cases of oil a year. Ordering cost is $40, and annual carrying cost is $3 per case. The station owner has specified an annual service level of 99%. ROP = 77 cases

a. What level of safety stock is appropriate if lead time demand is normally distributed with a mean of 80 cases and a standard deviation of 5 cases?

b. What is the risk of a stockout during lead time?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M958607

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