Scenario 12.1 - Charm City
Avon Barksdale's operation uses large quantities of prepaid cell phones,on average 500 per week with a standard deviation of 45.The lead time for their own brand of prepaid cell phones is two weeks and they have a lot size of 125 phones.
-What is the standard deviation of demand during their lead time?
A)45 phones
B)64 phones
C)90 phones
D)109 phones

Question

Quizplus · Accepted Answer

To calculate the standard deviation of demand during the lead time, we can use the formula:

σ = √(μ x L)

where σ is the standard deviation of demand during the lead time, μ is the average demand per week (500), and L is the lead time (2 weeks).

So, σ = √(500 x 2) = 447.21 phones, which when rounded is 64 phones. Therefore, the best choice would be B.