1. The demand for an electronic component is normally distributed with an average demand during lead time of 4500 units and a standard deviation of 150. If a service level of 95% is desired, then the company’s safety stock for this component is approximately
a. 150 units.
b. 247 units.
c. 336 units.
d. 740 units.
2. A product’s usage is normally distributed with an average demand during lead time of 8,000 units and a standard deviation of 250. Currently, the reorder point for this product is 8,200. If the company would like to have a service level of 95% for this product then
a. it must decrease its safety stock by approximately 412 units.
b. it must decrease its safety stock by approximately 212 units.
c. it must increase its safety stock by approximately 412 units.
d. it must increase its safety stock by approximately 212 units