Asked by Ahmad Ahmadzai on May 04, 2024
Verified
Daily demand for a product is normally distributed with a mean of 150 units and a standard deviation of 15 units. The firm currently uses a reorder point system, and seeks a 75% service level during the lead time of 6 days.
a. What safety stock is appropriate for the firm?
b. What is the reorder point?
Safety Stock
Inventory kept on hand to protect against fluctuations in demand or supply, ensuring that there are no stockouts.
Reorder Point
The inventory level at which a new order should be placed to replenish stock before it runs out, taking into account lead times.
Lead Time
The total time taken from the initiation of a process or order until its completion or delivery.
- Acquire knowledge and perform calculations to determine the appropriate amounts of safety stock and when reorders need to be placed, considering the variability in demand and aimed service levels.
Verified Answer
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????? ??????May 07, 2024
Final Answer :
SS = 0.67 ∙ 15 ∙ 6\sqrt { 6 }6 = 24.6; ROP = 150 * 6 + 24.6 = 924.6
Learning Objectives
- Acquire knowledge and perform calculations to determine the appropriate amounts of safety stock and when reorders need to be placed, considering the variability in demand and aimed service levels.