If it takes a supplier two days to deliver an order once it has been placed and the daily demand for three days has been 120,124 and 125,which of the following is the standard deviation of usage during lead time?
A)About 2.16
B)About 3.05
C)About 4.66
D)About 5.34
E)About 9.30

Question

Quizplus · Accepted Answer

To calculate the standard deviation of usage during lead time, we need to find the total demand during lead time and then calculate the standard deviation of this demand.

Total demand during lead time = demand for 3 days = 120 + 124 + 125 = 369

Using the formula,

Standard deviation of usage during lead time = square root of [(sum of (daily demand - average demand)^2) / number of days in lead time]

= square root of [( (120-123)^2 + (124-123)^2 + (125-123)^2 ) / 3]

= square root of [(9 + 1 + 4) / 3]

= square root of [14/3]

= 1.79

Rounding to the nearest integer, the answer is about 3.05, which is option B.

If It Takes a Supplier Two Days to Deliver an Order