5. value: 5.00 points Problem 13-18 A newspaper publisher uses roughly 830 feet

Question

5. value: 5.00 points Problem 13-18 A newspaper publisher uses roughly 830 feet of baling wire each day to secure bundles of newspapers while they are being distributed to carriers. The paper is published Monday through Saturday. Lead time is six workdays. What is the appropriate reorder point quantity, given that the company desires a service level of 95 percent, if that stockout risk for various levels of safety stock is as follows: 1,500 feet, .10; 1,700 feet, 05; 2,100 feet, .02; and 2,400 feet, .01 Appropriate reorder point 6880 ft eRonk & Resources

Explanation / Answer

To be calculated:

Reorder point quantity

Given values:

Daily usage = 830 feet

Lead time = 6 workdays

Desired service level = 95% = 0.95

Stockout risk = 1.00 - 0.95 = 0.05

Solution:

Given, for stock out risk of 0.05, safety stock = 1,700 feet

Reorder point is calculated as;

Reorder point = (Daily demand x Lead time) + Safety stock

Reorder point = (830 x 6) + 1700

Reorder point = 4980 + 1700

Appropriate Reorder point = 6,680 feet

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