reorder point

I'm not sure of the lingo used in the problem. Does "no more than 5% of stockout" mean that he wants to ensure that he always has at least 95% projected two-week inventory on hand, or that he's willing to get down to within 5% of his daily needs before he's "out of stock"?

Also, how willing is he to being wrong? Does "no more than 5%" mean with 95% confidence, 99% confidence, something else?

He wants to ensure he has at least 95% projected two-week inventory on hand with 99 confidence.

Okay, so a two week inventory is 200 soles (on average). He wants to be 99% confident that he never gets below 190 soles on hand (95%). He also needs to account for the potential 212 soles he's going to use while he waits = 402. The 212 comes from (100 + 3sd)(2 weeks)=99% confidence .

Thanks.

What if he wants to know with 100% confidence? What would the reorder point be?

Use 4 sds (2*4=8) plus 100 = 108 times 2 weeks = 216. Plus the 190 base stock = 406

perfect, thanks.