The recently hired floor manager at the local store of a national home improvement chain is studying their inventory system. He has chosen patio blocks to be the first item examined. The historical supply and demand data for this item has indicated a constant lead time of 15 days. Demand per day is normally distributed with a mean demand of 2000 per day and standard deviation of 500 per day. He
plans to set the service level at 90% during lead time.
a. What is the amount of safety stock of blocks he should keep on hand?
b. What is the reorder point he should use?
a. SS = 1.28[Sq Root of (15)(500)(500)] = 2,484.52 = 2485
b. r = (15)(2000) + 2,485 = 32,485
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