Answer:
The correct answer is 74.22%.
Explanation:
As per the data given in the question,
Store is open for = 6 days per week
Demand = 27 units per day
Standard Deviation of daily demand = 5 units
Lead time for delivery = 6 days
Reorder point of = 170 units
As per the following formula,
Reorder point = Daily demand Ă— Lead time + z value Ă— standard deviation Ă— sqrt(Lead time), Â
where z = implied cycle service level
170 = 27 Ă— 6 + z Ă— 5 Ă— sqrt(6)
z = (170 - 27 Ă— 6) / (5 Ă— sqrt(6))
z = 0.65
From the Z table, Service level = 0.7422 or 74.22%.