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Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution with a mean of 120 gallons per week and a standard deviation of 17.0 gallons per week. The new manager desires a service level of 85 percent. Lead time is 1 days, and the dairy is open seven days a week (Hint: work in terms of weeks).
What is the Z value for the desired service level?
How many (fraction of) "weeks" is the lead time?
If we use a continuous inventory system, what safety stock level would be consistent with the desired service level?
If we use a continuous inventory system, what ROP would be consistent with the desired service level?
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