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Given this information: Daily demand =50 units , standard deviation = 6 units and lead time...

Given this information: Daily demand =50 units , standard deviation = 6 units and lead time = 4 days. What is the safety stock to attaib 5% rish of out stock during lesd time, asssuming that the denand in distributed normally?
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Answer #1

Safety Stock = zσd√L

Where z = number of standard deviations based on service level 95% = 1.645 from z table

σd = standard deviation of daily demand = 6

L = Lead Time = 4 days

Safety Stock = 1.645*6*√4 = 19.74 = 20

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