chapter8.docx

# chapter8.docx - Average demand = 500 units Average of the...

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Average demand = 500 units Average of the squares of the deviation = 51,250 / 10 = 5,125 Sigma = √ 5,125 = 71.59 units Answer. Sigma = 71.59 units Average demand x = 500 units 11.5) If sigma is 150 units, and the demand during the lead time is 200 units, calculate the safety stock and order point for: a. A 50% service level. b. An 85% service level. a. Safety Stock = (Sigma)(Safety Stock) = (152 units)(0) = 0 OP = DDLT + SS = 200 units + 0 = 200 units a. Safety Stock = (Sigma)(Safety Stock) = (150 units)(1.04) = 156 units OP = DDLT + SS = 200 units + 156 = 356 units Answer. a.- SS = 0 b.- SS = 156 units 11.7) For an SKU, the standard deviation of demand during the lead time is 150 units, the annual demand is 10,000 units, and the order quantity is 750 units. Management says it will tolerate only one stockout per year. What safety stock should be carried? What is the average inventory? If the lead time is 2 weeks, what is the order point? Standard Deviation (σ) = 150 units

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