Question

Problem 11-20 (Algo) Daily demand for a product is 170 units, with a standard deviation of 30 units. The review period is 5 days and the lead time is 2 days. At the time of review, there are 20 units in stock. If 95 percent service probability is desired, how many units should be ordered? (Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places and final answer to the nearest whole number.) Ordered quantity units

Answer 1

Periodic review system also called fixed interval reorder system has four original economic order quantity assumptions: -

• There are no restrictions on lot size.
• ordering cost and carrying cost
• demand should be independent
• The lead time is constant.

d = 170 units unit od = 30 units unit 1 P= 5 day LT : 2 day I= 20 unito CSL = 95% 2- Value (0.95). 164 = d CP+ LT) + Z JP + LT od - I = 170 (5+2) + 1.645+ 2 x30 - 20 (170x7) + 1•64 JT x 30 - 20 - 1190 + 130°17 - 20L = 1300. ar 1300 units Auswer (11 )