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How much safety stock of each variant

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Question - Orion sells 10 variants of a copier. One of the 10 variants represents the majority of total demand. Weekly demand for this variant is normally distributed, with a mean of 1,000 and a standard deviation of 200.

Each of the remaining 9 variants has a weekly demand of 28 and a standard deviation of 20.

Orion uses a reorder point policy and aims to provide a service level of 95%.

Replenishment lead-time is 4 weeks.

Assume 50 weeks in a year.

Required -

1. How much safety stock of each variant (the major variant, and each of the other 9 variants) must Orion keep? What is the Reorder Point for each variant?

2. If Orion decides to sell a universal design copier (i.e., only one variant), how much safety stock must Orion keep to achieve the same service level?

3. If Orion decides to keep the major variant (high-demand variant) and sell a universal design copier for the other 9 low-demand variants, how much safety stock should be used in total to achieve the same service level?

Reference no: EM132884788

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