Question

A potteruses clayat a daily rate that is normally distributed with a mean of 27pounds and a standard deviation of 8pounds. When the potterplaces an order for the clayit requires 5days for the order to arrive.7.What is the Service Level if the shop places an order when inventory reaches 155pounds

Answer 1

Answer:

100 percent

Step-by-step explanation:

mean ( average daily demand ) ( d )  = 27 pounds

standard deviation of demand ( std ) = 8 pounds

Lead time ( taken order takes to arrive ) ( L ) = 5 days

Reorder point = 155 pounds

Determine the service level )

Applying the equation below

Reorder point = d x L + (Z x  std )       note : Z = service factor

155 = 27 * 5 + ( Z  * 8 )

155  = 135 + 8Z

hence Z ( service factor ) = ( 155 - 135 ) / 8 = 2.5

hence the service level is ≈ 100 percent