Final answer:
The reorder point can be calculated by adding the lead time demand to the safety stock. The lead time demand is calculated by multiplying the lead time with the average daily demand. The safety stock is an additional buffer quantity based on the desired service level.
Step-by-step explanation:
In this question, we are given the mean (μ) of the daily demand as 150 and the standard deviation (σ) as 30. The reorder point is the inventory level at which we should order more items to meet the demand. It can be calculated by adding the lead time demand (demand during the lead time) to the safety stock. The lead time demand can be calculated by multiplying the lead time (time from order placement to delivery) with the average daily demand (μ).
Let's say the lead time is 5 days. The lead time demand would be 5 * 150 = 750. The safety stock is an additional buffer quantity kept to account for uncertainties in demand or lead time. It can be based on the desired service level. For example, if we want a service level of 95% (which means meeting 95% of the demand), we can use the z-score table to find the corresponding z-value. With a z-value of 1.645 (from the z-score table), we can calculate the safety stock as z * σ = 1.645 * 30 = 49.35 (rounded to 49).
The reorder point would be the lead time demand plus the safety stock: 750 + 49 = 799. Therefore, the reorder point is 799. This means that when the inventory level reaches 799, it is time to place a new order to meet the demand.