The demand during the lead-time is normally distributed with a mean of 40 and a standard deviation of 4.If the company wishes to maintain a 90 percent service level, how much safety stock should be held?
A)45.12
B)41.28
C)1.28
D)5.12

Question

Quizplus · Accepted Answer

To calculate safety stock, we need to find the z-value which corresponds to the desired service level of 90%, using the standard normal distribution table:

z = 1.28

Then, we can calculate the safety stock as:

Safety stock = z * standard deviation of lead-time demand 
= 1.28 * 4 
= 5.12

Therefore, the answer is (D) 5.12.

The Demand During the Lead-Time Is Normally Distributed with a Mean