Managing Supply Chain and Operations 1st Edition by Thomas Foster ,Scott Sampson,Cynthia Wallin,Scott Webb

Exercise 21

A company uses the periodic review inventory model to calculate its order quantity for a product that has a daily demand of 40 with a lead time of nine days. The company places orders every 16 days for this product. The standard deviation of daily demand during the uncertainty period is estimated to be 100. If the company wants to achieve a service level of 95% for this product, what should its order quantity be if there are 75 units on hand at the next order?