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1. Linda L. is in charge of maintaining hospital supplies at General Hospital. During the past year the lead-time when orderi

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Answer #1

Monthly demand (D) = 300

Number of working weeks = 4

Weekly demand (d) = 300/4

Weekly demand (d) = 75 units

Monthly Standard deviation = 27

Weekly Standard deviation (s) = 27/4

Weekly Standard deviation (s) = 6.75 units

(A)

Mean demand for lead time = Weekly demand × Lead time

Mean demand for lead time of 6 weeks = 75 × 6 = 450 units

Mean demand for lead time of 3 weeks = 75 × 3 = 225 units

(B)

Standard deviation of lead time demand = s.\sqrt{LeadTime}

Standard deviation of demand for lead time of 6 weeks = (6.75 × 2.44949) = 16.534 units

Standard deviation of demand for lead time of 3 weeks =

(6.75 × 1.73205) = 11.691 units

(C)

Given service level = 99%

Value of Z corresponding to service level of 99% = 2.33

Safety Stock = Z × Standard deviation of demand during lead time

Safety stock for 3 weeks = Z × Standard deviation of demand during lead time of 3 weeks

Safety stock for 3 weeks = 2.33 × 11.691

Safety stock for 3 weeks = 27.2408 units

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