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. Furthermore, the standard deviation for BX-5 was 7. Ms. Flynn would like to maintain a 95% service level. z=1.65

a) What safety stock level do you recommend for BX-5?

Safety Stock=___ units

b) What is the appropiate reorder point?

Reorder point = ___units

Answer 1

Given,

Mean lead time demand \(=65\)

Standard deviation \((\mathrm{SD})=7\)

Service \(\mathrm{z}=95 \%, \mathrm{z}=1.65\)

a)

$$ \begin{aligned} \text { Safety stock for } 95 \% \text { level } &=7 \times[65(\text { at } 0.95)] \\ &=7 \times 1.65 \\ &=11.5 \end{aligned} $$

Hence, the safety stock is \(11.5\)

b)

$$ \begin{aligned} \text { Reorder point } &=\text { Mean lead time demand + Safety stock } \\ &=65+11.5 \\ &=76.5 \end{aligned} $$

Hence, the reorder point is \(76.5\) bandages