TABLE 7-2 Standard Deviations and Probabilities Z= Number of Deviations Required Probability of Being in Stock Probability of Stockout 1 84.13% 15.77% 1.04 85 15 1.28 90 10 1.65 95 5 1.96 97.5 2.5 2.0 9772 2.28 2.33 99 1 3.0 99.86 0.14 You manage inventory for your company and use a continuous review inventory system to control reordering items for stock. Your company is open for business 300 days per year. One of your most important items experiences demand of 28 units per day, normally distributed with a standard deviation of 3 units per day. You experience a lead time on orders from your supplier of six days with a standard deviation of two days. If you order 1,800 units or less, you pay the supplier $5.80 per unit. Orders of 1,800 or more can be bought at a unit price of $5.55. Your ordering cost is $58. Your inventory carrying cost is 20 percent. You have established a service level policy of 95 percent on this item. Use Table 7-2. a. What is your optimal order quantity? (Round up your answer to the next whole number.) a. What is your optimal order quantity? (Round up your answer to the next whole number.) Optimal order quantity units b. What is your reorder point? (Round your answer up to the next whole number.) Reorder point units es c. How much safety stock do you carry? (Do not round intermediate calculations. Round your answer to the nearest whole number.) Safety stock units d. What is your average inventory? (Round your answer up to the next whole number.) Average inventory units