In order to determine the standard deviation of usage during lead time in the reorder point formula for a fixed-order quantity inventory model which of the following must be computed first?
A)Standard deviation of daily demand
B)Number of standard deviations for a specific service probability
C)Stockout cost
D)Economic order quantity
E)Safety stock Level

Question

Quizplus · Accepted Answer

The standard deviation of usage during lead time is directly related to the standard deviation of daily demand, so this must be computed first. The other options (B-E) are not directly related to the computation of the standard deviation of usage during lead time.

In Order to Determine the Standard Deviation of Usage During