Demand for a product is approximately normal, averaging 5 units per day with a standard deviation of 1 unit per day. Lead time for this product is approximately normal, averaging 10 days with a standard deviation of 3 days
What reorder point provides a service level of 90 percent?
This problem requires formula (12-17 ), since both demand and lead time are variable. The value of z that corresponds to 90 percent service is 1.28
σDLT = = = 15.33
ROP = 5(10 ) + 1.28(15.33 ) = 50 + 19.62 = 69.62
Business
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