2) A lab orders a number of chemicals from the same supplier every 30 days. The
ID: 431797 • Letter: 2
Question
2) A lab orders a number of chemicals from the same supplier every 30 days. The lead time is six days. The assistant manager of the lab must determine how much of one of these chemicals to order. Check of stock reviewed that 10 jars of 25-milliliter (ml) are on hand. Daily usage of the chemical is appropriately normal with a mean of 12.5 ml per day and a standard deviation of 4.5 ml per day. The desired service level for this chemical is 95%. a) How many jars of the chemical should he ordered? b) What is the average amount of safety stock of the chemical?Explanation / Answer
Following to be noted :
Supply frequency = 30 days
Lead time = 6 days
Therefore,
Protection period = Supply frequency + Lead time = 30 + 6 = 36 days
Standard deviation of daily usage = 4.5 ml / day
Standard deviation of demand during protection period
= Standard deviation of daily usage x Square root ( protection period )
= 4.5 x square rot ( 36 )
= 4.5 x 6
= 27 ml
Desired service level = 95%
Therefore ,
Z factor = NORMSINV ( 0.95 ) = 1.6448
Therefore,
Safety stock
= Z factor x Standard deviation of demand during protection period
= 1.6448 x 27 ml
= 44.40 ML
SAFETY STOCK = 44.40 ML
Theoretical reorder point
= Daily usage x Protection period + Safety stock
= 12.5 x 36 + 27
= 450 + 27
= 477 ml
Amount in hand = 10 jars of 25 ml = 250 ml
Therefore ,
Amount to be ordered
= Theoretical reorder point – Amount in hand
= 477 ml – 250 ml
= 227 ml
= 227/25 = 9.08 ( 9 rounded to nearest whole number )
9 JARS TO BE ORDERED
SAFETY STOCK = 44.40 ML
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