(a) A firm has two independent stores operating in two markets.Each store experiences daily demand that is normally distributedwith mean = 10 and std = 1. Assuming service level of 90% (i.e.,z=1.28) and a lead time of one, what is the safety stock kept ateach store? What is the total reorder point for the two storescombined?
(b) Now, the firm decides to consolidate the two stores into itstwo branches of a single firm such that the warehouse storage iscentralized. Assuming the demand random variables at the twobranches are independent, what is the distribution of demandexperienced by the firm? What are the firm’s total safety stock andthe recorder point (assuming service level of 90% and a lead timeof one)?
(c) Following part (b), if the lead time increases to 3 days,what are the firm’s total safety stock and the recorder point?
