Barbara Flynn is in charge of maintaining hospital supplies at General Hospital. During the past year, the mean lead time demand for bandage BX-5 was 75 (and was normally distributed). Furthermore, the standard deviation for BX-5 was 6. Ms. Flynn would like to maintain a 95% service level. a) what safety stock level do you recommend for BX-5 b) what is the appropriate reorder point?

The Safety Stock is 10. and the Reorder Point = 85.

a)  Safety stock = Standard deviation * Appropriate z value (demand and service level).

Safety Stock = 6 * 1.64

Safety Stock = 9.84

Safety Stock = 10

b) Reorder Point = Lead Time Demand + Safety Stock

Given Information

Lead TIme Demand = 75

Safety Stock = 10

Reorder Point = 75 + 10

Reorder Point = 85

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a)  10

b)  85

Explanation:

a)

The safety stock is gotten by multiplying the standard deviation with the appropriate z value (demand and service level).

THe z coefficient of service level of 95% is 1.64

So we multiply the SD (standard deviation) with 1.64

Safety Stock = 6 * 1.64 = 9.84 = 10

b)

Now, the reorder point.

Reorder Point = Lead Time Demand + Safety Stock

It is already given that Lead TIme Demand is 75 and we found Safety Stock to be 10, so:

Reorder Point = 75 + 10 = 85

um sure