Question: Use the data below to answer the question below. Average daily demand 3 2 5 cases per day Standard deviation of daily demand 9 5

Use the data below to answer the question below.
Average daily demand 325 cases per day
Standard deviation of daily demand 95 cases per day
Average Lead Time 2 days
Inventory holding cost 20% of the item's value per year
Purchase Price $50 per case
Order Cost $10 per order
Stockout Cost $35 per case
Desired Service Level 80%
Assume the company operates 365 days per year
You look back at historical data and find that lead time is not constant but is variable with an average of 2 days. What should the reorder point be set at to meet the desired service level if the standard deviation of lead time was found to be 0.5 days and the z-score for a service level of 80% is 0.84?

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