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:

Consumer Purchase Decision

The process a consumer goes through in choosing a particular product or service, influenced by internal and external factors.

Financial Transaction

An agreement or exchange between two parties involving the transfer of money, goods, services, or property.

Alternative Evaluation

The process in which consumers assess various products, brands, or services to make an informed decision before making a purchase.

Consumer Purchase Decision

The process through which a consumer goes to select, purchase, use, and dispose of goods or services.