Ned’s Natural Foods sells unshelled peanuts by the pound. Historically, Ned has observed that
daily demand is normally distributed with a mean of 80 pounds and a standard deviation of 10
pounds. Lead time also appears normally distributed with a mean of eight days and a standard
deviation of one day. What ROP would provide a stockout risk of 10 percent during lead time?
28. Regional Supermarket is open 360 days per year. Daily use of cash register tape averages 10 rolls.
Usage appears normally distributed with a standard deviation of 2 rolls per day. The cost of ordering tape is $1, and carrying costs are 40 cents per roll a year. Lead time is 3 days.
a. What is the EOQ?
b. What ROP will provide a lead time service level of 96 percent?