A house painting company uses, on average 70 cans of paint every week with a standard deviation of30 cans per week. Demand for cans of paint follows an approximately Normal distribution. Lead time for ordering more paint is consistently 1 week.
a. How much safety stock is required for a stock out risk of 1 percent?
b. What ROP will provide a risk of stock out of 1 percent during lead time?
c. Would a stock out risk of 5 percent increase or decrease the amount of safety stock? Support your answer.