What is the risk of a stockout during lead time?

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 A service station uses 1,200 cases of oil a year. Ordering cost is $40, and annual carrying cost is $3 per case. The station owner has specified an annualservice level of 99 percent.

a.    What level of safety stock is appropriate if lead time demand is normally distributed with a mean of 80 cases and a standard deviation of 5 cases?

b.   What is the risk of a stockout during lead time?

    • 10 years ago
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    A service station uses 1,200 cases of oil a year.
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