-
The distribution of lead time demand for an item is as follows :
The reorder level is 1.25 times the expected value of the lead time demand. The service level is
-
- 25%
- 50%
- 75%
- 100%
- 25%
Correct Option: D
The expected value of lead time demand
⇒ 80 × 0.20 + 100 × 0.25 + 120 × 0.30 + 140 × 0.25 = 112
Reorder level is 1.25 times the lead time demand.
So, Reorder value = 1.25 × 112 = 140
∴ Here, we can see that both the maximum demand and reorder value are equal, service level = 100%
