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

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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 7 days, a 95% service level will require how much safety stock?

10 units
13 units
17 units
22 units
8 units

business Operations-Management

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Answer 1

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Answer #1

Z = 1.645 (for 95% service level)

Lead time = 7 days

Standard deviation = 5 days

ROP = Z * standard deviation * sqrt (lead time)

= 1.645 * 5 * SQRT(7) = 21.76 or 22.

The correct option is 22 units.

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Answer 2

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