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If daily demand is normally distributed with a mean of 15 and standard deviation of 5,...

If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, a 90 percent service level (Z=1.29) will require how much safety stock?

A. 7 units

B. 10 units

C. 13 units

D. 16 units

business   Operations-Management   
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Answer #1

1. C .13 units

The simplest formula for this case is :

Safety stock = z * SD * sqrt(lead time)

Safety stock = 1.29 * 5 * sqrt(4)

Safety stock = 12.9

Which roughly estimates to 13

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