Consider an economic order quality where demand is 1000 units, economic order qu
ID: 324879 • Letter: C
Question
Consider an economic order quality where demand is 1000 units, economic order quantity Q=200 units, the desired probability of not stocking out P=0.95, the standard deviation of demand during lead time a=25 units and lead time =L=15 days. Determine the reorder point. Assume that demand is over 250 days in a year. Consider an economic order quality where demand is 1000 units, economic order quantity Q=200 units, the desired probability of not stocking out P=0.95, the standard deviation of demand during lead time a=25 units and lead time =L=15 days. Determine the reorder point. Assume that demand is over 250 days in a year.Explanation / Answer
Annual Demand D = 1000 units
EOQ = 200 units
Service Level = 95 %
Standard deviation of demand during lead time ?d = 25 units
Lead Time L = 15 days
Reorder point ROP = dL+Safety stock = d*L+z*?d*? L = (1000/250)*15 + 1.65*25*?15 = 220 units