Question

Using the probability approach to determine an inventory safety stock and wanting to be 95 percent sure of covering inventory demand, which of the following is the number of standard deviations necessary to have the 95 percent service probability assured?A) 1.28B) 1.64C) 1.96D) 2.00E) 2.18

Answer 1

B) 1.64

Step-by-step explanation:

Given that there is 95% service probability i.e. assured

So here the company applied the approach in normally that sets the probability for not stocking out the 95 percent

So it would have the approx 1.64 standard deviation with respect to the safety stock

Therefore the option c is correct