The UNLV Bookstore sells a unique calculator to college students.The demand for this calculator has a normal distribution with an average daily demand of 20 units and a standard deviation of 4 units per day.The lead time for this calculator is very stable at 9 days.Compute the statistical reorder point that results in a 95 percent in-stock probability (Z = 1.65).
A)19.8 units
B)80 units
C)180 units
D)199.8 units
E)720 units

Question

Quizplus · Accepted Answer

The statistical reorder point formula is: 
(statistical demand during lead time) + (Z-score for desired service level) x (standard deviation during lead time)
Using the given values: 
(statistical demand during lead time) = 20 units/day x 9 days = 180 units
(Z-score for desired service level) = 1.65
(standard deviation during lead time) = 4 units/day x sqrt(9 days) = 12 units
Plugging these values into the formula: 
180 + 1.65 x 12 = 199.8 units
Therefore, the statistical reorder point is 199.8 units, which means that the UNLV Bookstore should reorder the calculator when there are 199.8 units left in stock to have a 95% probability of not running out of stock during the lead time.

The UNLV Bookstore Sells a Unique Calculator to College Students