Answer:
ROP (xy) = 724 units to be recorded
Step-by-step explanation:
Given:-
- Demand for an inventory item(x) is normally distributed with :
mean ux = 150 units/day
standard deviation sx = 2 units/day
- lead time(y) is normally distributed with:
mean uy = 4 days
standard deviation sy = 0.5 days
- Service level is 95% (zs=1.65):
Find:-
at what point should it be reordered?
Solution:-
- We will deonte (xy) the number of units to be serviced to be normally distributed with mean and standard deviation:
uxy = ux*uy = 150*4 = 600 units
sxy = √[(uy*sx^2) + ux^2*sy^2 ]
=√[(4*2^2) + 150^2*0.5^2 ]
= 75.10659
- At the service level of 95% the confidence interval would be:
ROP (xy) = uxy + zs*sxy )
ROP (xy) = 600 + 1.65*75.10659
ROP (xy) = 724 units to be recorded
