Historically, demand has averaged 40 units with a standard deviation of 20. The company currently has 79 units in stock. What is

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3 years ago

5

the Service Level

1 answer:

Elden [556K] · Answer 1 · 2022-09-30T19:30:22+03:00

The company with 79 units in stock have a Service Level of 97

The z score is used to determine by how many standard deviations the raw score is above or below the mean. The z score is given by:

$z=\frac{x-\mu}{\sigma} ;\\\\where\ x=raw\ score, \mu=mean,\sigma=standard\ deviation$

Given that: μ = 40, σ = 20, hence for x = 79:

$z=\frac{79-40}{20} =1.95$

From the normal distribution table, P(z < 79) = P(z < 1.95) = 97.44%

Hence the company with 79 units in stock have a Service Level of 97