Ken Ells, owner, and operator of Kennels, Inc. is concerned that the person in charge of ordering dog food is often incurring an order expediting expense because he is waiting too long (letting the inventory level drop too low) before ordering. Past data indicates that demand during the lead time (when expediting does not occur) is normally distributed with a mean of 340 pounds and a standard deviation of 45 pounds. Ken wants the probability of running out of dog food to be .03. a. If the current order point is 400 pounds, what is the resulting service level? b. If Ken wants a service level of 97% for dog food, what should be the order point? Please show a correct solution. Thank you.
Ken Ells, owner, and operator of Kennels, Inc. is concerned that the person in charge of ordering dog food is often incurring an order expediting expense because he is waiting too long (letting the inventory level drop too low) before ordering.
Past data indicates that demand during the lead time (when expediting does not occur) is
Ken wants the probability of running out of dog food to be .03.
a. If the current order point is 400 pounds, what is the resulting service level?
b. If Ken wants a service level of 97% for dog food, what should be the order point?
Please show a correct solution. Thank you.
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