Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution with a mean of 21 gallons per week and a standard deviation of 3.5 gallons per week. The new manager desires a service level of 90 percent. Lead time is 2 days, and the dairy is open seven times a week. (work in terms of weeks)
Using the ROP model, there are 8.39 gallons to be consistent with the SL level...
A) If a fixed interval model is used instead of ROP, and the order size is 34 gallons, 90 percent SL, and order interval of 10 days and a supply of 8 gallons on hand, what is the probability of experiencing a stockout before this order arrives?
B) Suppose the manager is using the ROP MODEL, One day after placing an order with the supplier, the manager receives a call from the supplier that the order will be delayed . The supplier promises to have the order there in 2 days. The manager checks the supply and finds that 2 gallons have been sold since the order was placed. What is the probability that the dairy will run out of the supply before the shipment arrives?
This posting contains solution to following inventory problem: