In order to reduce costs, CarCity is considering contracting with a local business to produce the RI25 tires locally, instead of importing the tires from Indonesian suppliers. The local business, named AI Rubber, can produce the tires at the rate of 75 tires day. The production costs are expected to be OMR 14.5 per tire. The setup for a production run requires five hours, with a cost for labor and lost production time of OMR 75 per hour. Each day's production is delivered immediately to CarCity. After one year of operations, CarCity realized that daily demand for the tires was not constant, and some variability existed. the mean of demand is 23.88825 and the standard devation is 0.171895 Assume that CarCity has decided for some reasons to continue procuring the R125 tires from Indonesia, and that the lead time remains constant at 15 days. 1. CarCity has specified a Type 1 service level of 95%. Accordingly, what size of safety stock should be kept in order to achieve this service level?

Practical Management Science
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ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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In order to reduce costs, CarCity is considering contracting with a local business to produce the RI25 tires locally, instead of importing the tires from Indonesian suppliers. The local business, named AI Rubber, can produce the tires at the rate of 75 tires day. The production costs are expected to be OMR 14.5 per tire. The setup for a production run requires five hours, with a cost for labor and lost production time of OMR 75 per hour. Each day's production is delivered immediately to CarCity. After one year of operations, CarCity realized that daily demand for the tires was not constant, and some variability existed. the mean of demand is 23.88825 and the standard devation is 0.171895 Assume that CarCity has decided for some reasons to continue procuring the R125 tires from Indonesia, and that the lead time remains constant at 15 days.
1. CarCity has specified a Type 1 service level of 95%. Accordingly, what size of safety stock should be kept in order to achieve this service level?

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