You are a distributor of steel cables that are used in many different kinds of construction applications. You stock this product in reels of either 2,000 feet or 5,000 feet. 1. Your demand for the 5,000-foot reels is 1,000 reels per month. The standard deviation of demand is 200 reels per month. Reorder lead-time is 6 weeks. a. How much safety stock do you need to achieve a service level of 90%?
b. What is the reorder point for this level of service? 3. You are able to locate a new supplier who can deliver in 3 weeks.
c. What would your reorder point be with a 3-week lead-time for a 90% service level?