Question

First Printing has contracts with legal firms in San Francisco to copy their court documents. Daily demand is almost constant at 11,700 pages of documents. The lead time for paper delivery is normally distributed with a mean of 4 days and a standard deviation of 1 day. A 98% service level is expected. Compute First's ROP. Refer to the standard normal table for z-values. The reorder point is documents (round your response to the nearest whole number).

Answer 1

The ROP is 70785 documents

Explanation:

The formula for ROP is for variable lead time is,

ROP = dm + ZdS

Now, daily demand = d = 11,700

mean lead time = m = 4 days

standard deviation = S = 1 day

service level = 98%

This corresponds to a z-value of 2.05

so Z = 2.05

Hence

ROP = (11,700)(4) + (2.05)(1)(11,700)

ROP = 70785