Question

If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 7 days, a 95% service level will require how much safety stock?

Answer 1

Answer: 22 units

Step-by-step explanation:

Given

lead time = 7

mean = 15

Standard Deviation = 5

service level = 95%

Using the formulae

Safety stock = safety factor ( z value) x standard deviation x
`√(lead time)`

But

Z value for 95% service level = 1.645 = safety factor

= 1.645 x 5 x
`√(7)`

=21.76 which estimates to 22units