Asked by Brianna Edwards on Jun 18, 2024
Verified
What safety stock should be held to put the fill rate at 0.99?
A) 251 phones
B) 145 phones
C) 454 phones
D) 100 phones
Safety Stock
Extra inventory held by a business to protect against stockouts due to variability in demand or supply chain disruptions.
Fill Rate
A performance metric that measures the percentage of customer demand that is met without backorders or stockouts.
- Acquire the capability to execute methodologies for meeting defined supply chain targets, such as fill rate and expected insufficiency each cycle of replenishment.
Verified Answer
PP
Priyanka PatelJun 24, 2024
Final Answer :
C
Explanation :
To calculate the safety stock required to achieve a fill rate of 0.99, we can use the formula:
Safety stock = Z-score x standard deviation x lead time + buffer stock
where Z-score for 0.99 fill rate is 2.33 (from standard normal distribution table).
Plugging in the values, we get:
Safety stock = 2.33 x 145 x 3 + 500
Safety stock = 454.35
Rounding up to the nearest whole number, we get a safety stock of 454 phones, which is option C.
Safety stock = Z-score x standard deviation x lead time + buffer stock
where Z-score for 0.99 fill rate is 2.33 (from standard normal distribution table).
Plugging in the values, we get:
Safety stock = 2.33 x 145 x 3 + 500
Safety stock = 454.35
Rounding up to the nearest whole number, we get a safety stock of 454 phones, which is option C.
Learning Objectives
- Acquire the capability to execute methodologies for meeting defined supply chain targets, such as fill rate and expected insufficiency each cycle of replenishment.