The hospital now changes suppliers and the lead time is known to be four days. If the standard deviation of the demand for surgical stents is 6 per week, demand averages 50 per week, and the desired service level is still 95 percent, what is the approximate reorder point?

Question

Quizplus · Accepted Answer

To calculate the reorder point, we use the formula: Reorder Point = (Average Demand per period * Lead Time) + Safety Stock. The z-score for a 95% service level is approximately 1.65. First, convert the standard deviation of weekly demand to daily demand since the lead time is given in days. The standard deviation per day = 6 / sqrt(7) because there are 7 days in a week. Then, calculate the daily demand: 50 stents per week / 7 days = approximately 7.14 stents per day. For a 4-day lead time, the average demand = 7.14 stents/day * 4 days = 28.56 stents. Safety Stock = z-score * standard deviation of demand during lead time = 1.65 * (6/sqrt(7)) * sqrt(4) = approximately 12.65 stents. Therefore, the reorder point = 28.56 + 12.65 ≈ 41.21 stents per day * 7 days = approximately 220 stents.

The Hospital Now Changes Suppliers and the Lead Time Is