What is the average demand during lead time


Problem

Annual demand for a particular halogen bulb is 1500 at a business that operates 300 days per year. The cost per order $220 and the holding cost per unit per year is $4.6. If the lead time is 20 days, and demand during lead time follows the empirical distribution given in the following table:

# of Units

Probability

55

0.05

70

0.1

85

0.25

100

0.2

115

0.25

130

0.1

145

0.05

1) What is the average demand during lead time?
2) What is the required safetystock to ensure a 85% service level?
3) For a reorder point of 130 what is the service level?

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