Question: The hardware warehouse is evaluating safety stock for its hammers. The daily demand is normally distributed with a mean if 5 units per day and a standard deviation of 2 units. It always takes exactly 3 days for the hammers to arrive. They want to maintain a 95% service level.
What is the standard deviation of the demand during lead time?
How much safety stock should be carried?
What should the re-order point be?