Answer:
The correct answer is 74.22%.
Explanation:
As per the data given in the question,
Store is open for = 6 days per week
Demand = 27 units per day
Standard Deviation of daily demand = 5 units
Lead time for delivery = 6 days
Reorder point of = 170 units
As per the following formula,
Reorder point = Daily demand × Lead time + z value × standard deviation × sqrt(Lead time),
where z = implied cycle service level
170 = 27 × 6 + z × 5 × sqrt(6)
z = (170 - 27 × 6) / (5 × sqrt(6))
z = 0.65
From the Z table, Service level = 0.7422 or 74.22%.
