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Questions on R.O.P. and S.S.
1.
If the Safety Stock is 5 units and the average demand during lead time is 22
units, then the R.O.P. is?
2.
If the probability of a stock out is 0.05, then the service level is?
3.
If the average demand during lead time is 35 units, the probability that the
demand will be greater than 33 units is 0.03, and management desires a
service level of 97%, then the R.O.P. is?
4.
If the R.O.P. is set at 28 units and the safety stock is 4 units, while the
probability of a stock out must not exceed 5%, then the average demand
during lead time is?
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View Full DocumentSOLUTIONS
1 If the Safety Stock is 5 units and the average demand during lead time is 22
units, then the R.O.P. is?
R.O.P. = ( Average Demand during lead time ) + ( Safety Stock )
=
( 22 ) + ( 5 ) = 27
2.
If the probability of a stock out is 0.05, then the service level is?
Service Level = 1.0
–
Probability of a stock Out
= 1.0
–
0.05 = 0.95
i.e.
95%
3.
If the average demand during lead time is 35 units, the probability that the
demand will be greater than 33 units is 0.03, and management desires a
service level of 97%, then the R.O.P. is?
Service Level of 97% means Probability of a stock out is 3% or 0.03
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 Winter '10
 Verma

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