A repair garage has a demand for oil of 60 gallons per week during the lead time with a standard deviation of 10 gallons per week. The garage supervisor expects oil to be in stock 95.99% of the time. The lead time for oil is 1 week. Assume demand varies and lead time is constant with normal distribution. What is the reorder point for the oil? Select the closest answer. 60 gallons 40 gallons 70 gallons 85 gallons
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We need to calculate the safety stock, which is the amount of inventory kept on hand to protect against stockouts during the lead time. The safety stock is determined by the desired service level, which in this case is 95.99%. Show more…
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