Question 12.9: Computing the ROP When Demand Is Variable A restaurant uses ...

Operations Management

Computing the ROP When Demand Is Variable
A restaurant uses an average of 50 jars of a special sauce each week. Weekly usage of sauce has a standard deviation of 3 jars. The manager is willing to accept no more than a 10 percent risk of stockout during lead time, which is two weeks. Assume the distribution of usage is normal.
a. Which of the given formulas is appropriate for this situation? Why?
b. Determine the value of z.
c. Determine the ROP.

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