An item that is managed with a periodic review system has average daily demand of 30 units with a standard deviation of 5. The order interval for this item has been set at 30 days. Lead time for this item averages 5 days, with a standard deviation of 0.4 days. Acceptable stockout risk has been established as 2.5%. At the latest count, there are 180 units in inventory. How many units should be ordered?
Expert Answer
Order Quantity in Periodic Review System Q = d*(tb+L) + z*σL*d- I
d = Daily demand = 30 units
tb = 30 days
Lead Time L
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