Asked by Shanda Mckinney on May 04, 2024
Verified
Thomas' Bike Shop stocks a high volume item that has a normally distributed demand during the reorder period. The average daily demand is 70 units, the lead time is 4 days, and the standard deviation of demand during the reorder period is 15.
a. How much safety stock provides a 95% service level to Thomas?
b. What should the reorder point be?
Safety Stock
Inventory buffer maintained to guard against supply chain variability and ensure product availability.
Reorder Point
The level of inventory which triggers an action to replenish that particular inventory stock.
- Absorb knowledge and apply calculations to establish safety stock amounts and points for reordering, based on the unpredictability of demand and the service levels aspired to.
Verified Answer
FO
Friska OliviaMay 08, 2024
Final Answer :
a. SS = 1.65 × 15 = 24.75 units or 25 units
b. ROP = (70∗ 4) + 25 = 305 units.
b. ROP = (70∗ 4) + 25 = 305 units.
Learning Objectives
- Absorb knowledge and apply calculations to establish safety stock amounts and points for reordering, based on the unpredictability of demand and the service levels aspired to.
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