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.
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 |
A company is using a product with a daily average demand of 500 units and a...
For a product A, if the average daily demand is 40 units, and it takes a supplier nine days to deliver an order once it has been placed and the standard deviation of daily demand is 4, in order to have 95% service level, what should be the reorder point?
Suppose the daily demand of a product follows a normal distribution with the mean of 50 units and the standard deviation of 10 units. Lead time is 9 days. The ordering cost is $400 per order, and the inventory holding cost is $20 per unit per year. A cycle service level (probability of no stockout) of 95% is required. Using the fixed order quantity model, what is the reorder point? 500 450 O 720 630 MRP is a technique designed...
1. What are the six assumptions of the EOQ model? 2. Average daily demand for a product is normally distributed with a mean of 25 units and a standard deviation of 4 units. Lead time is fixed at 20 days. What reorder point provides for a service level of 95 percent (z=1.65)?
The demand for a product is normally distributed with an average daily demand of 90 units and a standard deviation of 20. The lead time for the component is 4 days. A service level of 97.5% is desired. What is the optimal re-order point? ANSWER IS 438 UNITS. Please show steps as I do not know how they got here.
The following information is available for a product whose demand is variable. The daily demand is distributed normally, with an average demand of 5 and one standard deviation of 2. The delivery time for this product is also approximately normal, with an average of 10 days and a standard deviation of 3 days. We want a service level of 95%. Calculate the security stock level and the order point for this product
a gas company experiences variation in both demand for parts an in lead time in ordering them, the supply office notices normally distributed daily demand rate with a mean of 43 parts, and a standard deviation of 5.2. the replenishment lead time is normally distributed with a mean of 9 days and standard deviation of 4 days. A) if the daily demand and the lead time are independent, what reorder point should be established to provided a 95% level per...
HighLife corporation has the following information: Average demand = 30 units per day Average lead time = 40 days Item unit cost = $45 for orders of less than 400 units Item unit cost = $40 for orders of 400 units or more Ordering cost = $50 Inventory carrying cost = 15% The business year is 300 days Standard deviation of demand during lead time = 90 Desired service level = 95% What is the TAC at $40/unit?
The average daily demand for laptops at Best Buy is 20, with a std. deviation of 5 units. The lead time is constant at 2 days. Find the reorder point if management wants a 90% service level (i.e., risk stockouts only 10% of the time). How much is the safety stock?
13.38. Kelly's Tavern serves Shamrock draft beer to its customers The daily demand for beer is normally distributed, with an average of 20 gallons and a standard deviation of 4 gallons. The lead time re- quired to receive an order of beer from the local distributor is 12 days. Determine the safety stock and reorder point if the restaurant wants to maintain a 90% service level. What would be the increase in the safety stock if a 95% service level...
In a continuous review system, the average daily demand for a part is Normally distributed with mean 20 and standard deviation of 4. The lead time to receive the part from the time it is ordered is 9 days. The appropriate re-order point for this part if we want a 95% service level is