Question
In: Other
Thomas' Bike Shop stocks a high volume item that has a normally distributed demand during the reorder period.
Thomas' Bike Shop stocks a high volume item that has a normally distributed demand during the reorder period. The average daily demand is 70 units, the lead time is 4 days, and the standard deviation of demand during the reorder period is 15.
a. How much safety stock provides a 95% service level to Thomas?
b. What should the reorder point be?
Solutions
Expert Solution
The average daily demand = 70 units
Lead time = 4 days
Mean lead time demand = The average daily demand * Lead time
= 70 * 4
= 280 units
The standard deviation of demand = 15 units
Ans a)
Desired service level = 95%
Z-value for achieving 95% service level = 1.65
Safety stock = Z * Standard deviation of demand
= 1.65 * 15
= 24.75 or 25 units
Ans b)
Appropriate re-order point = Mean lead time demand + Safety stock
= 280 + 25
= 305 units
Amanda K answered 2 years agoRelated Solutions
Weekly demand for golf balls at the Happy Valley Golf Club pro shop is normally distributed...
Weekly demand for golf balls at the Happy Valley Golf Club pro shop is normally distributed...
A retailer stocks an item that has an annual demand of 2400 units. The retailer uses...
- Paymaster Enterprises has arranged to finance its seasonal working-capital needs with a short-term bank loan. The...
- TOWS matrix of WOW MOMO
- Write an anecdotal lead with a person focus from the following information; include a nut graph....
- Step 1 Picture yourself as a Senior Product Manager in your favorite industry. This could be...
- Gauss Jordan elimination using python for a 2d list (3x3) without using any library. Thanks
- What are some of the greatest barriers preventing our schools from meeting the educational goals for...
- What aspect of the materials used in nanotechnology differentiates it from the nanoscale devices that the...