A company wants to determine its reorder point (R). Demand is variable and the
company wants to build a safety stock into R. The company wants to have a service
probability coverage of 95 percent. If average daily demand is 8, lead time is 3 days,
and the standard deviation of usage during lead time is 2, which of the following is the
desired value of R?A. About 17.9
B. About 19.7
C. About 24.0
D. About 27.3
E. About 31.2
Desired z score for service probability coverage of 95 percent = 1.64. Equation 20.5 is
(Average daily demand x Number of days of lead time) + (Standard deviation during
lead time) x (Desired z score) = (8 x 3) + (2 x 1.64) = 24 + 3.28 = 27.28 = about 27.3
units.
Assume the service rate for a queue in a truck-loading operation is 2 trucks per hour.
Using the infinite queuing notion for the models presented in the textbook, which of the
following is the average service time?
A. 2 hours
B. 1 hour
C. 0.5 hour
D. 0.25 hour
E. None of these