Compute the safety stock required to maintain

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Reference no: EM133641864

Question: Demand for a popular hospital bed from a Hill-Rom warehouse in the US is normally distributed with a mean of 232 units/week and standard deviation of 81 units/week. Lately, Hill-Rom's contract manufacturer has been unreliable with its deliveries. Hill-Rom estimates the lead time is normally distributed with a mean of 3 weeks and standard deviation 3 weeks. Hill-Rom orders the beds at a unit cost of $2,265. The annual cost of carrying inventory at the warehouseis 29% of the purchase cost per unit per year. Hill-Rom reviews its inventory continuously. Assume the warehouse operates 52 weeks/year, 7 days/week, and 364 days/year. Compute the safety stock required to maintain a service level of 92%. Carry calculations to at least 3 decimal places. Round your answer to the nearest tenth of a dollar (one decimal place).

Reference no: EM133641864

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