A brand of soap has a lead time of eight weeks to reorder, a weekly average...
A brand of soap has a lead time of eight weeks to reorder, a weekly average usage of 20 units and a weekly standard deviation of 8 units. The reorder point for this soap, assuming a 99% service level (z-score = 2.33)
Homework Answers
Average weekly demand (d) = 20 units
Standard deviation of weekly demand (
d)
= 8 units
Lead time (L) = 8 weeks
At 99% service level value of Z = 2.33
Reorder point = d × L + (Z ×
d × √L)
= 20 × 8 + (2.33 × 8 × √8)
= 160 + (2.33 × 8 × 2.83)
= 160 + 52.75
= 212.75 or rounded to 213 units
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