When Demand Is Constant and Lead Time Is Variable, Safety

question 147

Short Answer

When demand is constant and lead time is variable, safety stock computation requires three inputs: the value of Z, __________, and the standard deviation of lead time.

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Definitions:

Straight-Line Method

A depreciation accounting method that allocates the cost of a fixed asset evenly over its useful life.

Salvage Value

The estimated resale or scrap value of an asset at the end of its useful life, considered in depreciation calculations.

Working Capital

A measure of a company's liquidity, operational efficiency, and short-term financial health, calculated as current assets minus current liabilities.

Revenues

The total income generated from normal business operations and includes discounts and deductions for returned merchandise.