Daily demand for a certain product is normally distributed, with a mean of 100 and a standard deviation of 15. The supplier is reliable and maintains a constant lead time of 5 days. The cost of placing an order is $10 and the cost of holding inventory is $0.50 per unit per year. Assume sales occur over 360 days of the year.
Your goal here is to find the order quantity and reorder point to satisfy a 90 percent probability of not stocking out during the lead time.
Find the optimal order quantity.
Find the required safety stock.
Find the reorder point.
What happens to the reordering point if the service level is 95% (select from the list in cell B26)?