Answer:
The right approach is "282 pounds".
Explanation:
The given values are:
Average consumption (d)
= 50 pounds a day
Lead time (L)
= 4 days
Standard deviation of lead time (sl)
= 1 day
Z value for 5% stock out risk will be:
⇒ [tex]NORMSINV(1-5 \ percent)[/tex]
⇒ [tex]1.645[/tex]
So,
Reorder point is:
⇒ [tex]d\times L + z\times d\times sl[/tex]
On substituting the values, we get
⇒ [tex]50\times 4 + 1.645\times 50\times 1[/tex]
⇒ [tex]282 \ pounds[/tex]