Answer:
97.26%
Explanation:
Note: The complete question is attached as picture below
Reorder point = 18 units
Total demand = 46 units (Total number of the units)
Lead Time = 3 days
Annual demand = Total demand / Total days
Annual demand = 46 units / 10 days
Annual demand = 4.6 units
Standard deviation of demand = √∑(x - X)²/n-1
Standard deviation of demand = √14.40/10-1
Standard deviation of demand = √1.6
Standard deviation of demand = 1.265
Now, we determine the service level.
ROP = Annual Demand (LT) + z(σd)√LT
18 = (4.6*3) + (z*1.265*√3)
18 = 13.8 + 2.19z
z = 1.92
So, we calculate the corresponding Service level in Excel using the NORMSDIST function as shown below
Service level = NORMSDIST(1.92)
Service level = 0.9726
Service level = 97.26%
