Demand for an item averages 60 units per day with a standard deviation of 4. Lead time for this item averages 5 days with a standard deviation of 0.2 days. What reorder point would we use if our acceptable risk of a stockout is 2.5%?
Note 1: Round intermediate and final calculations to two decimal places.
Note 2: For 10% stockout risk use Z = 1.28. For 5% stockout risk use Z = 1.645. For 2.5% stockout risk use Z = 1.96.