Answered: Chicago's Hard Rock Hotel distributes a…

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Question

Chicago's Hard Rock Hotel distributes a mean of
I ,000 bath towels per day to guests at the pool and in their rooms.
This demand is normally distributed with a sta ndard deviation
of 100 towels per day, based on occupancy. The laundry firm
that has the linens contract requires a 2-day lead time. The hotel
expects a 98% service level to satisfy high guest expectations.
a) What is the safety stock?
b) What is the ROP?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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