Question

Marlo Stanfield's operation also uses large quantities of prepaid cell phones, on average 1500 per week with a standard deviation of 145. The lead time for their own brand of prepaid cell phones is three weeks and they have a lot size of 350 phones. To ensure they never run out, they keep a safety stock of 500 phones with Proposition Joe. What is the cycle service level under this policy?
a. 0.9398
b. 0.9833
c. 0.9768
d. 0.9512

Answer 1

Answer:

c. 0.9768

Explanation:

Lead time

Safety stock 500

Standard deviation 145

Safety stock = z * Standard deviation * $\sqrt{L}$

500 = z * 145*$\sqrt{3}$

500 = z * 251.14

Z = 1.990863

Therefore, for this Z value, we obtain the option c. 0.9768