Ask Question
29 December, 01:36

Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of standard deviations to achieve a service level or probability by the standard deviation of periodic demand. True or false?

+4
Answers (1)
  1. 29 December, 02:00
    0
    TRUE

    Explanation:

    The Z value determinates the level of service at a normalize distribution of (0; 1) We then convert this value to the deviation of our distribution by multiplying each other.

    The Z value represent the the value at which a 99% or 95% or whatever percent of change of safety is achieve. We convert by our deviation to adapt the normalize distribution of (1; 0) to our values.

    There is always a chance for stock-out as we work with probabilities and at more higher safety level we require more units to make up for the change of a single customer from nowhere purchase an unexpected amount. As this person can appear anytime and purchase any amount there is always a level of uncertain (5% or 1% or less)
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Safety stock can be computed when using the fixed-order quantity inventory model by multiplying a "z" value representing the number of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers