Business professionals often use the acronym SMART to describe good business goals. What does the acronym stand for? The acronym
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<u>SOLUTION AND EXPLANANTION:</u>
Let us define :Protection period” = P = Reorder period + Lead time = 7 + 3 days = 10 days
Z value for service level of 99% as per Z table= 2.33
Demand during protection period = = D = 80
Standard deviation of demand during Protection period = Sd = 10
Safety stock during protection period =
<u>Therefore, </u>
Gross quantity to be ordered = Demand during protection period + Safety stock during protection period = 80 +73.67 = 153.67
However, number of items already in hand = 30 units
<u>Hence, </u>
Net quantity to be ordered = Gross quantity to be ordered – Number of items already in hand = 153.67 – 30 = 123.67 ( 124 rounded to nearest whole number)