Question

The College Bookstore sells a unique calculator to college students. The demand for this calculator has a normal distribution with an average daily demand of 20 units and a standard deviation of 4 units per day. The lead time for this calculator is 9 days. Compute the statistical reorder point that results in a 95 percent in-stock probability. Choose the closest answer. quiz;et

Answer 1

A) 200 units

Step-by-step explanation:

mean daily demand = 20 calculators

standard deviation = 4 calculators

lead time = 9 days

z-critical value (for 95% in-stock probability) = 1.96

normal consumption during lead-time:

= mean demand × lead time

= 20 × 9

= 180 calculators

safety stock = z × SD × √L

= 1.96 × 4 × √9

= 1.96 × 4 × 3

= 23.52 calculators

reorder point = normal consumption + safety stock

= 180 + 23.52

= 203.52 calculators