If Daily Demand Is Normally Distributed with a Mean of 15

question 24

Multiple Choice

If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, 90 percent service level will require safety stock of approximately

• A) 7 units
• B) 10 units
• C) 13 units
• D) 16 units
• E) 26 units

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Definitions:

Induced Consumption

Spending induced by changes in the level of income.

Autonomous Consumption

The minimum amount that people will spend on the necessities of life.

Income

The financial gain or money received by an individual or a business from various sources like work, investments, or transfers, during a specific period.

Consumption

The act of using goods and services for personal needs or to satisfy consumer desires.