If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95% service requires how much safety stock?
A) 28 units
B) 30 units
C) 49 units
D) 59 units
E) 114 units

Question

Quizplus · Accepted Answer

To calculate safety stock for a 95% service level, we need to find the z-value associated with the 95th percentile in a standard normal distribution, which is 1.64.

Safety stock = z-value * standard deviation of lead time * square root of average demand during lead time 
= 1.64 * 3 * sqrt(10*12) 
= 49

Therefore, the best choice is (C) 49 units.

If Daily Demand Is Constant at 10 Units Per Day