Question

Management has carefully measured the standard deviation of the demand of a product and

plans to use this to calculate the level of safety stock. If they keep one Standard Deviation of
safety stock then the expected service level should be approximately:

A) 100%.
B) 90%.
C) 85%.
D) 15%.
E) 35%.

Answer 1

The expected service level should be approximately 85%.

Step-by-step explanation:

The expected service level should be approximately 85%.

The standard deviation is used to determine the amount of safety stock needed to achieve a desired service level. In this case, if they keep one standard deviation of safety stock, it means they want to have enough stock to cover 68% of the demand (since approximately 68% of the data is within one standard deviation of the mean).

Therefore, the expected service level would be approximately 100% - 68% = 85%.