Author Question: The purpose of safety stock is to (Read 37 times)

Wadzanai · **on:** Dec 3, 2019

Question 1

Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be?
◦ about 18
◦ about 38
◦ more than 40
◦ about 32
◦ about 24

Question 2

The purpose of safety stock is to
◦ protect the firm from a sudden decrease in demand.
◦ eliminate the likelihood of a stockout due to erroneous inventory tally.
◦ eliminate the possibility of a stockout.
◦ replace failed units with good ones.
◦ control the likelihood of a stockout due to the variability of demand during lead time.

manuelcastillo · **Reply #1 on:** Dec 3, 2019

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