Daily Demand for a Product Is Normally Distributed with a Mean

question 105

Essay

Daily demand for a product is normally distributed with a mean of 150 units and a standard deviation of 15 units.The firm currently uses a reorder point system,and it seeks a 75% service level during the lead time of 6 days.
a.What safety stock is appropriate for the firm?
b.What is the reorder point?

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Definitions:

Accounts Payable Subsidiary Ledger

A ledger containing all account details of amounts owed by a business to its suppliers or creditors, facilitating more detailed tracking alongside the general ledger.

Payment For Supplies

The monetary expenditure for obtaining supplies necessary for the operation of a business.

Monthly Adjustment

A routine accounting process for updating financial statements and records to reflect changes and transactions that occurred within a month.

Supplies Used

The amount of materials and goods utilized during a specific period for the operation of a business.