If the Standard Deviation of Demand Is 10 and the Desired

question 2

Multiple Choice

If the standard deviation of demand is 10 and the desired service level is 0.90,then what is the safety stock?

• A)9
• B)10
• C)12.8
• D)16.5
• E)23.3

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Definitions:

Net Income

The total profit of a company after subtracting all its expenses from its revenues.

Direct Method

A way to prepare the cash flow statement where actual cash flow information from company’s operations segment is used.

Operating Expenses

Expenses incurred in the normal course of business operations, excluding costs of goods sold and depreciation.

Prepaid Expenses

Costs paid for in advance for goods or services to be received or used in the future, recorded as assets and subsequently expensed over the applicable period.