Barbara Flynn is in charge of maintaining hospital supplies at General Hospital. During the past year,...

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

Solutions

Expert Solution

Given,

Mean lead time demand $=65$

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

Service $\mathrm{z}=95 \%, \mathrm{z}=1.65$

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

Hence, the safety stock is $11.5$

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

Hence, the reorder point is $76.5$ bandages

Amanda K answered 2 years ago

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