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:

Financial Statements

Documents that provide an overview of a business or individual's financial condition in a specific period, including balance sheets, income statements, and statements of cash flows.

Decision Making

A process of selecting the best option among multiple alternatives to achieve an objective or a solution to a problem.

Net Income

A financial term representing the profit left after all expenses, taxes, and costs have been subtracted from total revenue.

Income

Money received, especially on a regular basis, for work or through investments.