If Daily Demand Is Normally Distributed with a Mean of 15

question 128

Multiple Choice

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?

• A) 8 units
• B) 10 units
• C) 13 units
• D) 17 units
• E) 22 units

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Definitions:

Consumer Equilibrium

A state in which a consumer has allocated their income in a way that maximizes their total utility, given the prices of goods and services.

Total Utility

The total satisfaction received from consuming a particular quantity of goods and services.

Indifference Curve

A graph representing combinations of two goods or services among which a consumer is indifferent, showing preference levels.

Optimal Consumption

The mix of goods and services that maximizes consumer utility or satisfaction given their budget constraints.