Compute the required safety stock when weekly demand is 100 units,lead time is 2 weeks,the desired service level is 98% (which corresponds to 2.06 standard deviations from the mean)and the standard deviation of demand during lead time is 30 units.
A)25 units
B)48 units
C)62 units
D)75 units

Question

Quizplus · Accepted Answer

Safety stock is calculated as the standard deviation of demand during lead time multiplied by the Z-score corresponding to the desired service level. Here, it's 30 units * 2.06 = 61.8 units, rounded to 62 units.

Compute the Required Safety Stock When Weekly Demand Is 100