Question: Please help with the last portion as I do not understand the formula Reorder Point with Safety Stock Compute the necessary items below to find
Please help with the last portion as I do not understand the formula

Reorder Point with Safety Stock Compute the necessary items below to find WHEN to order! . Reorder point (ROP) calculations: ROP = DD X RC under certainty ROP = (DD x RC) + SS under uncertainty Daily demand (average) DD = units/day Historical Data Length of each Where DD = daily demand Standard deviation of Demand = ODD = units/day replenishment RC = length of replenishment cycle Daily Demand (units) cycle (days) SS = safety stock 90 12 Length of replenishment cycle (average) = RC = lays 85 12 Standard deviation of Replenishment Cycle = ORC days 75 11 60 13 Service level target = 96% 78 15 83 14 HINT: To convert Service Level to z-score, use =NORM.S.INV(probability) 95 13 Note: The standard normal distribution has a mean=0 and StDev=1. Reorder Point without Variability = units 93 12 + 95 14 When demand is uncertain (always ) and replenishment cycle is uncertain (always ). Safety Stock (to buffer from variability) = SS = units 94 = 92 SS = ZO2 DD * RC + 02 RC * DD2 Reorder Point (in the real world!) = ROP = units 83 (round to the nearest unit) 90 85 Unit Cost of items in inventory = 1= $ 15.00 per unit 95 Inventory carrying cost rate = C= 32% per year 80 How much does it cost to hold just the Safety Stock for one year? per year Extra: How much more would it cost to increase Safety Stock to reach a 97% Service Level? To reach 99% Service Level
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