Using the Probability Approach to Determine an Inventory Safety Stock

question 18

Multiple Choice

Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand,which of the following is the number of standard deviations necessary to have the 95 percent service probability assured?
79)

• A)1.28
• B)1.64
• C)1.96
• D)2.00
• E)2.18

---

Definitions:

P > .05

Indicates that the probability of obtaining the observed data under the null hypothesis exceeds 5%, typically leading to failing to reject the null hypothesis.

Null Hypothesis

A hypothesis suggesting no significant difference or effect, serving as the default assumption to be tested against the alternative hypothesis.

Region

A specified area or division within a larger context, whether geographical, spatial, or conceptual, identified by certain characteristics or boundaries.

Null Hypothesis

A statement used in statistics that suggests no significant difference or effect exists.