Adding 15 Standard Deviations of Safety Stock to the Average Demand

question 109

Multiple Choice

Adding 1.5 standard deviations of safety stock to the average demand during lead time will result in a service level of approximately:

• A) 68.4%
• B) 84.1%
• C) 93.3%
• D) 97.7%

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Definitions:

Squared Market Shares

A measure used in economics to assess the level of market concentration by squaring the market share percentages of each firm within the industry and then summing them.

Concentration

The degree of market power held by a few companies within an industry, often measured using indices like the HHI.

Economies of Scale

The reduction in per-unit cost as the volume of production increases, due to factors like specialization and bulk purchasing.

Oligopoly

A market structure characterized by a small number of large firms that dominate the market, leading to limited competition and the potential for collusion or price setting.