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47I am trying to calculate my reorder point for my purchased item using the safety stock journal but I am running into issues with the standard deviation of issues per month.
safety stock formula = service level x standard deviation of demand x lead time
Reorder point formula = average demand per day x lead time + safety stock
My example is below
Average issues per month is 2,749.50 lbs, standard deviation of issues per month is 4,709.43 lbs, service level factor is 95%, and your lead time is 10 days, then your safety stock and reorder point are:
Safety Stock = 1.64 x 4,709.43 x 10 Safety Stock = 77,364.82 lbs
Reorder Point = (2,749.50 / 30) x 10 + 77,364.82 Reorder Point = 78,281.32 lbs
Having a reorder point of 78,281.32lbs is way to high when the monthly average is 2,749.50. Can someone help me where I am going wrong with the standard deviation of issues per month? I am grabbing all these numbers straight from the safety stock journal.
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