ROP With Variable Demand and Lead Time Data Risk of Stock Out Assume the maximum risk of stock out we wish to take is 1%. What is the ROP? Average demand per week = 200 Stdv of demand per week = 50 Average lead time in weeks = 3 Stdv of lead time in weeks = 2 Service level: 95% Safety stock will become: Lead time and demand are normally distributed New ROP = ROP With Variability Service level 90% 95% 99% 99.9% Note: 1 Service level = stockout risk Key Z-Values Z-value 1.28 1.65 2.33 3.08

ROP With Variable Demand and Lead Time Data Risk of Stock Out Assume the maximum risk of stock out we wish to take is 1%. What is the ROP? Average demand per week = 200 Stdv of demand per week = 50 Average lead time in weeks = 3 Stdv of lead time in weeks = 2 Service level: 95% Safety stock will become: Lead time and demand are normally distributed New ROP = ROP With Variability Service level 90% 95% 99% 99.9% Note: 1 Service level = stockout risk Key Z-Values Z-value 1.28 1.65 2.33 3.08

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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