Final answer:
The statement is true. When demand for an item is normally distributed, planning for demand during the lead time to be twice the average daily demand and carrying 2 standard deviations worth of safety stock inventory is a commonly used method in inventory management.
Step-by-step explanation:
The statement is true. When demand for an item is normally distributed, planning for demand during the lead time to be twice the average daily demand and carrying 2 standard deviations worth of safety stock inventory is a commonly used method in inventory management.
For example, if the average daily demand for an item is 100 units, then planning for demand during the lead time to be twice the average daily demand would be 200 units. Carrying 2 standard deviations worth of safety stock inventory would depend on the variability in demand. If the standard deviation of demand is 50 units, then carrying 2 standard deviations worth of safety stock inventory would be 2 * 50 = 100 units.
By planning for higher demand and carrying safety stock inventory, businesses can ensure they have enough inventory to meet customer demands and avoid stockouts.