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Safety stock reorder point

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The daily demand of a product can be specified by a normal distribution the average daily demand is 250 units with a standard deviation of 40" units. The order lead time for this product is also normally distributed with an average of 10 days and a standard deviation of 3 days. What is the safety stock and reorder point for a 95% in stock probability?

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This solution helps with a problem regarding safety stock reorder point.

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The calculation:

1. Z: NORMSINV(Service level) , for example Z=1.64 for a 95% service level

2. Safety stock: {Z*SQRT(Avg. Lead Time * ...

Solution provided by:
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
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