In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. What is the standard deviation of demand during lead time?
A) 15 units
B) 100 units
C) 154 units
D) 500 units
E) 13,125 units
Answer: C
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Management Chapter 12
- An advantage of the fixed-period inventory system is that:
- Which of the following should be higher in P systems than Q systems?
- Q is to ________ systems as P is to ________ systems.
- Which of the following is a requirement of Q systems?
- What is the difference between P and Q inventory systems?
- A disadvantage of the fixed-period inventory system is that:
- The fixed-period inventory system requires more safety stock than a fixed-quantity system because:
- A bakery wants to determine how many trays of doughnuts it should prepare each day. Demand is normal with a mean of 5 trays and standard deviation of 1 tray. If the owner wants a service level of at least 95%, how many trays should he prepare (rounded to the nearest whole tray)? Assume doughnuts have no salvage value after the day is complete.
- Service level is:
- Suppose that papers for a newspaper stand cost $0.40 and sell for $0.80. They currently have no salvage value. If the stand owner is able to find an outlet that would provide a salvage value of $0.10, what would be the increase in service level?
- A local club is selling Christmas trees and deciding how many to stock for the month of December. If demand is normally distributed with a mean of 100 and standard deviation of 20, trees have no salvage value at the end of the month, trees cost $20, and trees sell for $50 what is the service level?
- The main trait of a single-period model is that:
- Which of the following items is mostly likely managed using a single-period order model?
- If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires how much safety stock?
- If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, a 90 percent service level will require how much safety stock?
- If demand is not uniform and constant, then stockout risks can be controlled by:
- The proper quantity of safety stock is typically determined by:
- The purpose of safety stock is to:
- Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be?
- A specific product has demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides a 95% service level?
- If the standard deviation of demand is six per week, demand is 50 per week, and the desired service level is 95%, approximately what is the statistical safety stock?
- Which of the following statements about quantity discounts is FALSE?
- When quantity discounts are allowed, the cost-minimizing order quantity:
- A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 612 units. What is the average inventory for this problem?