Question

A specific product has demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides a 95% service level?

The answer is 41. How do you arrive at this answer? (what are the calculations)

Answer 1

Demand during lead time \(=100\) units

Standard deviation \(\sigma_{\mathrm{L}}=25\)

Service level, \(Z=95 \%\) and its value is \(1.64\)

$$ \begin{aligned} \text { Safety stock } &=Z \sigma_{L} \\ &=1.64 \times 25 \\ &=41 \end{aligned} $$