Question

Barbara Flynn is in charge of maintaining hospital supplies at General Hospital. During the past year, the mean lead time demand for bandage BX-5 was 60 (and was normally distributed). Furthermore, the standard deviation for BX-5 was 7. Ms. Flynn would like to maintain a 90% service level. a) what safety stock level do you recommend for BX-5 b) what is the appropriate reorder point?

Answer 1

Explanation:

Given that

Mean lead time demand = 50

Standard deviation = 60

Service level = 90%, so the service level is 1.28

So by considering the above information , the safety stock is

a. Safety stock = Value of service level × standard deviation

= 1.28 × 7

= 8.96

b. And, the appropriate reorder point is

= Mean lead time demand + safety stock

= 60 + 8.96

= 68.96