Thomas’ Bike Shop stocks a high volume item that has a normally distributed demandduring the reorder period. The average daily demand is 70 units, the lead time is 4 days,and the standard deviation of demand during the reorder period is 15.a. How much safety stock provides a 95% service level to Thomas?b. What should the reorder point be Thomas' Bike Shop stocks a high volume item that has a normally distributed demandduring the reorder period. The average daily demand is 70 units, the lead time is 4 days,and the standard deviation of demand during the reorder period is 15.How much safety stock provides a 95% service level to Thomas?а.b. What should the reorder point be?

Given information: Average daily demand = 70 units Lead time…

Answered: Thomas’ Bike Shop stocks a high volume…

Purchasing and Supply Chain Management

6th Edition

ISBN:9781285869681

Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson

Chapter16: Lean Supply Chain Management

Section: Chapter Questions

Problem 10DQ: The chapter presented various approaches for the control of inventory investment. Discuss three...

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Thomas’ Bike Shop stocks a high volume item that has a normally distributed demand

during the reorder period. The average daily demand is 70 units, the lead time is 4 days,

and the standard deviation of demand during the reorder period is 15.

a. How much safety stock provides a 95% service level to Thomas?

b. What should the reorder point be

Thomas' Bike Shop stocks a high volume item that has a normally distributed demand
during the reorder period. The average daily demand is 70 units, the lead time is 4 days,
and the standard deviation of demand during the reorder period is 15.
How much safety stock provides a 95% service level to Thomas?
а.
b. What should the reorder point be?

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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