A company is using a product with a daily average demand of 500 units and a...
A company is using a product with a daily average demand of 500 units and a daily standard deviation of 50. The ordering lead time for this product is 9 business days and the targeted service level is 95%. The reorder point for this product is approximately Select one:
a. 3785 units.
b. 4500 units.
c. 4627units.
d. 4747units.
Homework Answers
Z value of 95% of service level = NORMSINV ( 0.95) = 1.6448
The formula for reorder point
= Daily demand x Lead time ( days) + Z value x standard deviation x square root ( lead time )
= 500 x 9 + 1.6448 x 50 x square root ( 9)
= 4500 + 1.6448 x 50 x 3
= 4500 + 246.72
= 4746.72 ( 4747 rounded to nearest whole number )
|
ANSWER : 4747 |
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