Question

A company wants to determine its reorder point (R). Demand is variable and the company wants to build a safety stock into R. If the average daily demand is 12, the lead time is 5 days, the desired z value is 1.96, and the standard deviation of usage during lead time is 3, which of the following is the desired value of R?

Answer 1

Answer:

66 units

Explanation:

Now lets do it part by part shall we,

(12 x 5) + (3 x 1.96)

12 x 5 = 60

3 x 1.96 = 5.88

Now to add it all up

60 + 5.88 = 65.88 = 66