In: Statistics and Probability
Gainesville Cigar stocks Cuban cigars that have variable lead times because of the difficulty in importing the product: Lead time is normally distributed with an average of 4 weeks and a standard deviation of 1 week. Demand is also a variable and normally distributed with a mean of 150 cigars per week and a standard deviation of 25 cigars. Refer to the standard normal tableLOADING... for z-values. This exercise contains only parts a and b.
a) For a 95% service level, what is the ROP? The reorder point is nothing cigars (round your response to the nearest whole number).
note that reorder point = lead time × demand + safety stock
Since nothing about safety stock is given hence we have assumed safety stock to be zero.