Question

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?
b. What is the appropiate reorder point?

Answer 1

A. 12 units

B. 77 units

Step-by-step explanation:

A. Calculation to determine What safety stock level do you recommend for BX-5

Using this formula

Safety stock = Z * Standard deviation of demand

Let plug in the formula

Safety stock= 1.65* 7

Safety stock= 11.55 units

Safety stock=12 units (Approximately)

Therefore The safety stock level recommended for BX-5 is 12 Units

b. Calculation to determine What is the appropiate reorder point

Using this formula

Appropriate re-order point = Mean lead time demand + Safety stock

Let plug in the formula

Appropriate re-order point = 65 + 12

Appropriate re-order point = 77 units

Therefore the appropiate reorder point will be 77 units