Answer:
7,953.57 units
Explanation:
Given that
Total number of days in a year = 360 days
Daily demand = 500 units
Standard deviation of daily demand = 100 units
Interval of order = 10 days
Lead time = 9 days
Service level = 98% its z value = 2.05
On hand inventory = 2,800
Based on the above information, the order quantity is
= Daily demand × (interval of order + lead time) + {z value × sqrt (Interval of order + lead time) × standard deviation units} - on hand inventory
= 500 units × (10 days + 9 days) + {2.05 × √19 × 100 units} - 2,800 units
= 9,500 units + 893.57 units - 2,800 units
= 7,953.57 units
We simply applied the above formula
