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Sagot :
Answer: 29.4 gallons
Explanation:
The Safety Stock that should be held by the company to have a Service Level of 99.0% will be:
= Z × σ × ✓LT
Z = 2.326
σ = Standard deviation = 8
LT = Lead time = 2.50
Safety stock = = Z × σ × ✓LT
= 2.326 × 8 × ✓2.50
= 2.326 × 8 × 1.58
= 29.4 gallons
The safety stock is 29.4 gallons.
The amount of Safety Stock that the company should hold to have a Service Level of 99.0% is 29 gallons of paint.
Using this formula
Safety stock = z×(√L/T)×σ
Where:
d=Average Demand rate per time period=74 gallons per week
σ = Standard Deviation =8 gallons
L = Performance cycle or total lead time =2.5 week
z = 99% target service level =2.326
T = Time increment= 1 week
Let plug in the formula
Safety stock = (2.329)×(√2.5/1)×8
Safety stock=(2.329)×(1.581)×8
Safety stock=29.4
Safety stock = 29 gallons of paint (Approximately)
Inconclusion the amount of Safety Stock that the company should hold to have a Service Level of 99.0% is 29 gallons of paint.
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