A company has an average demand of 900 units per week with a standard deviation

Question

A company has an average demand of 900 units per week with a standard deviation of 90 units. Its replenishment lead time is 4 weeks. The company desires a cycle service level of 99%. Calculate the safety stock level that the company needs to hold O 891 units O 90 units O 540 units O 3,600 units 23 The time horizon of the operational planning is typically O weekdy or daily. O over the next several years o quarterly or yearly O monthly or quarterly 32 The forecast error measures the difference between the forecast demand of the two consecutive time periods O the forecast and the actual 0 the actual demand of the two consecutive time penods O the forecast and the estimate 38

Explanation / Answer

1. The answer is given below:

Safety stock= Average demand* Lead time

Safety stock= 900×4

Safety stock= 3600

2. The answer is given below:

monthly or quarterly

Operational plans are short term plan which are used for planning day to day operations for running an organization. Hence it is planned monthly or quarterly.

3. The answer is given below:

the forecast and the actual

The forecast error measures on the difference between the real and forecast in a time series of given period.

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