Question

Linda Lechner is in charge of maintaining hospital supplies at General Hospital. During the past year, the mean lead time demand for bandage BX-5 was 60. Furthermore, the standard deviation for BX-5 was 7. Linda would like to maintain a 90% service level. What safety stock level do you recommend for BX-5?

Answer 1

$Z = Normal Standard\\\alpha = standard devision\\L = Lead time$

The formula

$Safety Stock = Z \alpha \sqrt{L}$

$Z = 90%\\\alpha = 7\\L = 1 (year)$

$Safety Stock = 90 * 7\sqrt {L}\\Safety Stock = 6.3$

So, the BX-5 bandage stock that must be added is 6.3 from the previous stock. Or rounded to 7.

Further Explanation

Safety Stock is an additional inventory that is held to protect or maintain the possibility of shortages (stock out).

Safety Stock is a stock that is held to prevent the shortage of inventory when demand is uncertain or because the factors that determine the size of this inventory are the use of average raw materials during a certain period before the ordered goods arrive and the waiting time varies.

The safety inventory serves to protect or protect the possibility of a shortage of goods, for example, due to the use of goods that are greater than originally estimated or delays in receiving ordered goods.

Safety Stock is a number of inventory items that are added to prevent a vacancy, which is a condition where the number of requests exceeds the amount of goods supplied. This event is due to the fluctuating nature of demand where demand uncertainty sometimes causes forecasting needs in the coming period to be less than the actual occurrence and or can also fluctuate within the lead time itself.

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Details

Class: College

Subject: Business

Keywords: safety, stock, goods

Answer 2

Answer:

We should calculate this using the safety stock formula Z x standard deviation x Lead time

Explanation:

ired = 90%

For 90% service level the value of Z (standardized normal distribution table) = 1.281

Z is found in standard normal distribution table.

Find value of 0.45 (0.9/2) in the table and note row and column values.