The formula for calculating safety stock when an estimate of demand during lead time and its standard deviation are known is? A) SS = lead time * standard deviation B) SS = lead time * z C) SS = z* standard deviation D) SS = z*σ_dl E) SS = σ_dl* mean

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Quizplus · Accepted Answer

Safety stock (SS) calculation when demand during lead time and its standard deviation (σ) are known involves using the formula SS = z*σ, where z is the Z-score or the number of standard deviations from the mean, reflecting the desired service level. The correct formula is represented by D, which uses special characters to denote the multiplication of z (service level factor) by the standard deviation of demand during lead time (σ), although it's presented in a complex format.

The Formula for Calculating Safety Stock When an Estimate of Demand