In: Other
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
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