Lieutenant Commander Data is planning to make his monthly (every 30 days) trek t

Question

Lieutenant Commander Data is planning to make his monthly (every 30 days) trek to Gamma Hydra City to pick up a supply of isolinear chips. The trip will take Data about five days. Before he leaves, he calls in the order to the GHC Supply Store. He uses chips at an average rate of four per day (seven days per week) with a standard deviation of demand of two per day. He needs a 99 percent service probability.

If he currently has 40 chips in inventory, how many should he order? (Use Excel's NORMSINV() function to find the correct critical value for the given -level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)

What is the most he will ever have to order? (Use Excel's NORMSINV() function to find the correct critical value for the given -level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.)

Lieutenant Commander Data is planning to make his monthly (every 30 days) trek to Gamma Hydra City to pick up a supply of isolinear chips. The trip will take Data about five days. Before he leaves, he calls in the order to the GHC Supply Store. He uses chips at an average rate of four per day (seven days per week) with a standard deviation of demand of two per day. He needs a 99 percent service probability.

Explanation / Answer

Answer: at alpha = 99%

we have value of z = normsinv(99%) = 2.3263

also the daily demand = 4 units or 120 units per month

standsrd deviation of daily demand = 2 units or 60 units per month

Current level of inventory = 44 units

Lead time = 5 days

Safety stock = sigma x sqrt(lead Time) = 89.44

therefore reorder level = demand at lead time + safety stock = 5 x 4 + 89.44 = 109.44 units

So he should order = 109.44 - 40 = 89.44 units

Answer-2 The most he should order = 109.44 units

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