The injection molding department of a company uses an average of 30 gallons of s

Question

The injection molding department of a company uses an average of 30 gallons of special lubricant a day. The supply of the lubricant is replenished when the amount on hand is 170 gallons. It takes four days for an order to be delivered. Safety stock is 60 gallons, which provides a stockout risk of 9 percent. What amount of safety stock would provide a stockout risk of 3 percent? Assume normality. (Round your intermediate calculations and final answer to 2 decimal places.)

The injection molding department of a company uses an average of 30 gallons of special lubricant a day. The supply of the lubricant is replenished when the amount on hand is 170 gallons. It takes four days for an order to be delivered. Safety stock is 60 gallons, which provides a stockout risk of 9 percent. What amount of safety stock would provide a stockout risk of 3 percent? Assume normality. (Round your intermediate calculations and final answer to 2 decimal places.)

Explanation / Answer

Service level = 91% , Z at 91% = 1.34

Security stock = z * Standard deviation of lead time

60 = 1.34 * x

x = 44.77611

At the point when service level is 97%

z = 1.88

safety Stock = 1.88 * 44.77611= 84.17908

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