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MissTica
3 years ago
7

The paper usage at a small copy center is normally distributed with a mean of 5 boxes of paper per week, and a standard deviatio

n of 0.5 boxes. It takes 2 weeks for an order of paper to be filled by its supplier. What is the safety stock to maintain a 99% service level?
Mathematics
1 answer:
VladimirAG [237]3 years ago
7 0

Answer:

1.649 approximately 2

Step-by-step explanation:

S.d = standard deviation = 0.5

Time taken = lead time = 2 weeks

Mean = demand for week = 5 boxes

We are required to find the safety stock to maintain at 99% service level.

At 99% level, the Z value is equal to 2.326.

Therefore,

Safety stock = z × s.d × √Lt

= 2.326 × 0.5 x √2

= 1.649

Which is approximately 2.

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The very idea of a "production possibilities curve" represents the sort of simplification that is often used in the study of economics. The real world is much messier, and these curves are always dynamic. They are affected by the regulatory environment, resource quality, technology, product quality, and availability of alternate or competing products, among other things. The very existence of such a curve precludes the possibility of "win-win" situations, which we know are generally available if they are sought after.

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