The stationary shop estimates that the average demand for a popular ball-point pen is 12,000 pens per week with a standard deviation of 3,000 pens. The current inventory policy calls for replenishment orders of 156,000 pens. The average lead time from the distributor is 5 weeks, with a standard deviation of 2 weeks. If management wants a 95 percent cycle-service level, what should the safety stock be?

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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The stationary shop estimates that the average demand for a popular ball-point pen is 12,000 pens per week with a
standard deviation of 3,000 pens. The current inventory policy calls for replenishment orders of 156,000 pens. The
average lead time from the distributor is 5 weeks, with a standard deviation of 2 weeks. If management wants a 95
percent cycle-service level, what should the safety stock be?
101,118 pens
41,181 pens
O 41,118 pens
101,110 pens
Transcribed Image Text:The stationary shop estimates that the average demand for a popular ball-point pen is 12,000 pens per week with a standard deviation of 3,000 pens. The current inventory policy calls for replenishment orders of 156,000 pens. The average lead time from the distributor is 5 weeks, with a standard deviation of 2 weeks. If management wants a 95 percent cycle-service level, what should the safety stock be? 101,118 pens 41,181 pens O 41,118 pens 101,110 pens
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