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 will require how much safety stock?
A)7 units
B)10 units
C)13 units
D)16 units
E)26 units

Question

Quizplus · Accepted Answer

To determine the safety stock required for a 90% service level, we need to use the formula:

Safety stock = z-value x standard deviation x square root of lead time

where:

- z-value = the number of standard deviations from the mean needed to achieve the desired service level (in this case, 1.28 for a 90% service level)
- standard deviation = 5 (given)
- lead time = 4 days (given)

Plugging in these values, we get:

Safety stock = 1.28 x 5 x sqrt(4)
Safety stock = 1.28 x 5 x 2
Safety stock = 12.8

Rounding up, we get a required safety stock of 13 units. Therefore, the best choice is C) 13 units.

If Daily Demand Is Normally Distributed with a Mean of 15