Question
After recent customer complaints about running out of stock of paper towels, a retail store is considering basing their reorder point on a 99% service
After recent customer complaints about running out of stock of paper towels, a retail store is considering basing their reorder point on a 99% service level (instead of the current 90%). The paper towels have a normally distributed demand with a mean of 95 packages per day and a standard deviation of 30 packages per day. Their current supplier lead time is 6 days. By how much would their reorder point change if the store based their reorder point on a 99% service level?
Options:
1) 77 packages
2) 188 packages
3) 664 packages
4) 50 packages
5) 741 packages
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