ENTREPRENEURIAL OPERATIONS
INVENTORY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which is correct statement regarding Statistical Safety Stock
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Deviation of demand during lead time assumed to be normally distributed
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Using Mean Absolute Deviation (MAD) is more accurate than Standard Deviation
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It is suggested to achieve 100% of service level to increase higher profitability
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There is only one variability exists in the formula
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Explanation:
Detailed explanation-1: -Safety stock helps to address variability in your supply chain and demand, so supplier lead time should not impact your safety stock, only your cycle stock. You should always safeguard your inventory by looking at the standard deviation time.
Detailed explanation-2: -Safety stock is calculated by multiplying your desired service factor (Z score) by the standard deviation in lead time (), which is the degree and frequency by which the average lead time differs from the actual lead time.
There is 1 question to complete.