A Product's Usage Is Normally Distributed with a Weekly Average

question 74

Multiple Choice

A product's usage is normally distributed with a weekly average demand of 2,000 units and a weekly standard deviation of 125.The product's lead time is 4 weeks.Currently,the reorder point for this product is 8,200.If the company would like to have a service level of 95% for this product then

• A)it must decrease its safety stock by approximately 412 units.
• B)it must decrease its safety stock by approximately 212 units.
• C)it must increase its safety stock by approximately 412 units.
• D)it must increase its safety stock by approximately 212 units.

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Definitions:

Behavioral Economists

Scholars and professionals dedicated to analyzing how psychological, cognitive, emotional, cultural, and social influences affect the economic choices made by individuals and organizations.

Time Inconsistency

Describes a situation where a person's preferences change over time in such a way that what they prefer at one point in time is inconsistent with what they will prefer at another time.

Self-Control Problems

Refers to the difficulty individuals have in restraining their impulses or desires, often leading to challenges in decision-making that affect long-term goals.

Myopia

The lack of foresight or long-term planning, focusing only on the short-term gains or outcomes.