Question

suppose that usage of cooking oil at simons chicken fry is normally distributed with an average of 15 gallonsday. Harry has asked you to help him decide how to reorder cooking oil in order to achieve a service level of 95%. lead time is six days. check of stock reviewed that 20 gallons are on hanf

Suppose that usage of cooking oil at Simon's Chicken Fry is normally distributed with an average of 15 gallons/day and a standard deviation of two gallons/day. Harry has asked you to help him decide how to reorder cooking oil in order to achieve a service level of 95%. Lead time is six days. Check of stock reviewed that 20 gallons are on hand. Assume that cooking oil is ordered every 10 days. What is the amount to order? 235.2 233.2 225.6 230.4 235.6

Answer 1

Daily Demand = d = 15 gallons

Standard Deviation = $\sigma$ = 2 gallons

Lead time LT = 6 days

Service level = 95%

For 95% service level, Z value = 1.645

Review period i = 10 days

On-hand inventory = H = 20 gallons

Reorder point = d * (LT + i) + Z * $\sigma$ * $\sqrt{LT + i}$ - H

Reorder point = 15 * (6 + 10) + 1.645 * 2 * $\sqrt{6 + 10}$ - 20 = 240 + 13.16 - 20 = 233.16

Hence,

Answer: 233.2 gallons

-----------------------------------------------------------------------------------------------------------------------

In case of any doubt, please ask through the comment section before Upvote/downvote.

If you liked the answer, please give an upvote. This will be quite encouraging for me, thank-you!!!