Question

An airline has determined that 10 spare brake cylinders will give them stock out risk of 30%, whereas 14 will reduce the risk to 15% and 16 to 10%. It takes 3 months to receive items from supplier and the airline has an average of 4 cylinders per month. At what stock level should they reorder assuming that they wish to maintain 85% service level?

• A. 12 items
• B. 14 items
• C. 26 items
• D. 30 items

Answer 1

Answer:

C. 26 items

Lead time demand = 3 x 4 = 12 items, Safety Stock level should they reorder assuming that they wish to maintain 85% service level = 15% disservice it means 15% stock is out of risk, It is given that, 14 items will reduce the risk to 15%. Therefore, Reorder level = 12 + 14 = 26 items.