Answer:
The number of units to be ordered is 961.
Step-by-step explanation:
The optimum demand is given as
[tex]q=\bar{d}(L+R)+z\sigma_{L+R}-I[/tex]
From the data
Daily demand is given as [tex]\bar{d}[/tex]=50
Standard deviation is given as [tex]\sigma=30[/tex]
The Lead time is given as L=10 days
The Revier time is given as R=5 days
Initial values given as I=60 units
The confidence level is given as 99% so z is calculated using the NORMSINV() function as NORMSINV(0.99). The value of z is 2.33
Now the standard deviation in terms of the Lead and Review time is given as
[tex]\sigma_{L+R}=\sqrt{L+R}\sigma\\\sigma_{L+R}=\sqrt{10+5}\times 30\\\sigma_{L+R}=\sqrt{15}\times 30\\\sigma_{L+R}=116.18[/tex]
Substituting the values in the formula as
[tex]q=\bar{d}(L+R)+z\sigma_{L+R}-I\\q=50(10+5)+2.33\times 116.18-60\\q=50(15)+2.33\times 116.18-60\\q=960.69 \approx 961[/tex]
So the number of units to be ordered is 961.
