Find the mean and standard deviation for demand. 3b. Based on the information in problems 3 and 3a, what is the mean and standard deviation of demand during the lead time? 3c. Based on the information in problems 3, 3a, and 3b, how much safety stock should the plant manager maintain to ensure that stock-out will not be incurred in more than 5.5% of the order cycles?
Aboloway Company stocks a part that has a daily demand represented by the empirical distribution (shown in the table below). When restocking this part, the average lead time from the supplier is 3 days with a standard deviation of 0.5 days. The plant manager wants to determine how much safety stock to maintain for this part to ensure that stock-outs will not be incurred in more than 5.5% of the order cycles.
| Daily demand (d) in units | Frequency |
| 5 | 10 |
| 10 | 35 |
| 15 | 65 |
| 20 | 32 |
| 25 | 8 |
| Total Observations = 150 |
3a. Find the mean and standard deviation for demand.
3b. Based on the information in problems 3 and 3a, what is the mean and standard deviation of demand during the lead time?
3c. Based on the information in problems 3, 3a, and 3b, how much safety stock should the plant manager maintain to ensure that stock-out will not be incurred in more than 5.5% of the order cycles?
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