First Printing has contracts with legal firms in San Francisco to copy their cou
ID: 336102 • Letter: F
Question
First Printing has contracts with legal firms in San Francisco to copy their court documents. Daily demand is almost constant at
9,300
pages of documents. The lead time for paper delivery is normally distributed with a mean of
4 days
and a standard deviation of
1 day. A 99?% service level is expected. Compute? First's ROP. Refer to the standard normal table for? z-values.
Z
?Pr(Z)
0.38
65
0.50
69
0.67
75
0.84
80
1.04
85
1.28
90
1.41
92
1.56
94
1.65
95
1.75
96
1.88
97
2.06
98
2.33
99
The reorder point is
______
documents ?(round your response to the nearest whole? number).
Z
?Pr(Z)
0.38
65
0.50
69
0.67
75
0.84
80
1.04
85
1.28
90
1.41
92
1.56
94
1.65
95
1.75
96
1.88
97
2.06
98
2.33
99
Explanation / Answer
Solution-
Given-
Demand, D = 9300
Lead time, L = 4 days
std dev of lead time, ? = 1 day
Service level = 99%
Looking at the Z value for 99% service level in the table given in the question, we get Z = 2.33
Now reorder point = Demand during lead time + safety stock = D*L + Safety stock
If Lead time is variable and Demand is fixed, then Safety stock is given by Z*D*?.
Therefore Reorder Point = D*L + Z*D*? = 9300*4 + 2.33*9300*1 = 58869 units.
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