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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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