This preview shows page 1. Sign up to view the full content.
Unformatted text preview: whole year? 2. (Continuous review system, with safety stock) A factory produces a part to supply its customers. The factory faces a random demand from its customers. The weekly demand has a normal distribution, with the expectation (mean) of 300 units and the standard deviation of 90 units. The production lead time is 4 weeks (thats it takes 4 weeks to finish a production run). The production manager uses the continuous review system to plan production. 1) What is the safety stock necessary to achieve the service level of 98%? What is the corresponding reorder point? 2) Suppose the production manager must reduce the safety stock in the above question by 50%, by lowering the service level (while all other model parameters are unchanged). What will be the new service level (i.e., the probability of no stockout) that attains the reduced safety stock?...
View Full Document
- Fall '10