Question

Barbara Flynn is in charge of maintaining hospital supplies at General Hospital. During the past year, the mean lead time demand for bandage BX-5 was 65 (and was normally distributed). Furthermore, the standard deviation for BX-5 was 8. Ms. Flynn would like to maintain a 90% service level. Refer to the standard normal table for Z-values. a) What safety stock level do you recommend for BX-5? Safety stock = 10 units (round your response to the nearest whole number). b) What is the appropriate reorder point? Reorder Point = 75 units (round your response to the nearest whole number).

The ANSWERS above for my problems are correct. I need someone to please show work for them so I can understand how to do them! Thanks!

Answer 1

Mean lead time demand for BX-5 = 65

The standard deviation of demand = 8

Desired service level = 90%

Z-value for achieving 90% service level = 1.28

Ans a)

Safety stock = Z * Standard deviation of demand

= 1.28 * 8

= 10.24 or 10 units

Ans b)

Appropriate re-order point = Mean lead time demand + Safety stock

= 65 + 10

= 75 units