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1. Weekly demand for smartphones at the Apple store is normally distributed with a mean =300 and a standard deviation of =200. Foxconn, the assembler takes two weeks to supply an order from the Apple store. Apple is targeting CSL of 95% and monitors its inventory continuously.a. How much safety inventory of smartphones should Apple carry? b. What should its ROP be?

Respuesta :

Answer:

(a) 464 units

(b) 1,064 units

Explanation:

Given that,

Mean, M = 300

Standard deviation, SD = 200

Targeting CSL = 95%

Z-value for the 0.95 = 1.645 (Obtained from the Z-tables)

Lead time, L = 2

Standard deviation during lead time = SD × √L

                                                            = 200 × √2

                                                            = 200 × 1.41

                                                            = 282

Safety stock = z × Standard deviation during lead time

                    = 1.645 × 282

                    = 463.89 or 464 units

ROP = (M × L) + Safety stock

        = (300 × 2) + 464

        = 600 + 464

        = 1,064 units

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