The Circuit Town store’s most popular item is six-packs of 9-volt batteries. About 150 packs are sold per day, following a normal distribution with a standard deviation of 16 packs. Batteries are ordered from an out-of-state distributor; lead time is normally distributed with an average of 5 days and a standard deviation of 1 day. To maintain a 95% service level, what ROP is appropriate?

APPROACH c Determine a quantity at which to reorder by applying Equation (12-17) to the following data:

Average daily demand 5 150 packs Standard deviation of demand 5 sd 5 16 packs Average lead time 5 5 days Standard deviation of lead time 5 sLT 5 1 day Service level 5 95%, so Z 51.645 (from Appendix I or the Excel formula =NORMSINV(.95))