Register now or log in to join your professional community.
A specific product has expected demand during lead time of 100 units, with a standard deviation of 25 units. What safety stock (approximately) provides a 95% service level?
A.41
B.55
C.133
D.140
A.41................................................
(A) is the Correct Ans.
All the values put in the formula given by the costs analysts.
EOQ = SQRT (2 × Annual Demand × Ordering Cost Per Unit / Carrying Cost Per Unit)
The answer is A.41.
And the reorder point is141.
Best Regards
The question needs to mention the LEAD-TIME also to be answered correctly
SAFETY STOCK= Lead time factor * Service factor * Standard Deviation
SAFETY STOCK= Lead time factor *1.645 *25
**Assuming a ONE month lead-time, and as such Lead time factor =1
the safety stock of41 units should provide95% service level
