Question

IM.63 G's Dairy is trying to determine how to manage their stock of raw milk. They have an average daily demand of 29 gallons per day, but it varies by about 5 gallons per day. Their lead time for receiving new milk is 4 days. They are striving for an 95% service level. What should be their safety stock for raw milk? (Display your answer to two decimal places.) What should be their reorder point for raw milk? (Display your answer to two decimal places.) Number

Answer 1

Safety stock = 16.50 gallons

Reorder point = 132.50 gallons

This is a type of variable demand constant lead time problem and Scifely stock = ZOGJET 7 2 - No. of Standard deviations corresponary to do the service level probability od = Standard deviation of daily lemon L7 = head time - Here Z since = 1-65 - 95% Service level, (from table area under the Standardized Normal curve) LT = 4 days Gd=5 gallons per day (since it is told that demand varies 5 gallons/day) So safets stock = z od SIT = 1.65*5*14 = 1.657582 = 16.50g allons

Recorder point (CROP) = JLT + Z ato edol a average daily demand=29 g allone LTE head time - 4 days 2. No. of Standad de viac i un corresponding to service leve probability og Standard deviation of daily I demand Top JLF-4 Safely stock ROP : - T LT & Safety stock = 29x4 + 16.50 = 116 + 16.50 = 132.50 gallong

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