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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?

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tutorAnne

Answer: 22 units

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 [tex]\sqrt{lead time}[/tex]

 But

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

= 1.645 x 5 x [tex]\sqrt{7}[/tex]

=21.76  which estimates to 22units

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