Asked by Kaleb Hunter on May 07, 2024
Verified
Weekly demand for corn tortillas at Big Truck Tacos is normally distributed with a mean of 1500 and a standard deviation of 300.Marco's takes one and one half weeks to supply a Big Truck order.Big Truck is targeting a CSL of 95 percent and monitors its inventory continuously.How much safety inventory of corn tortillas should Big Truck carry? What should their ROP be?
CSL (Cycle Service Level)
A measure of the probability that a demand will be satisfied during a single order cycle without stockouts.
ROP (Reorder Point)
The inventory level at which an order should be placed to replenish stock before it runs out, taking lead time into account.
Normally Distributed
Describes a statistical distribution where data points are symmetrically distributed around the mean, showing a bell-shaped curve pattern.
- Calculate safety inventory and reorder points (ROP) for given demand distributions.
- Comprehend the function and significance of safety stock within the supply chain.
Verified Answer
= NORMSINV(0.95)× 300
( 1.5\sqrt { 1.5 }1.5 )
= 605
ROP = DL + ss
= 1500(1.5)+ 471
= 2855
Learning Objectives
- Calculate safety inventory and reorder points (ROP) for given demand distributions.
- Comprehend the function and significance of safety stock within the supply chain.
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