HomeCPIM Production Mgmt PrepQuestion 10 of 10
CPIM Production Mgmt PrepQuestion 10 / 10

A retail store is planning inventory for winter coats. The management has determined a safety factor of 1.28 with the expectation of allowing two backorders annually. With a seasonal demand of 15,000 units, they order batches of 1,500 units each, and the lead time standard deviation is 100 units, with a lead time of two weeks. What should the safety stock be? Item Safety Factor Seasonal Demand Order Quantity Lead Time Std Dev (units) Lead Time (weeks) Winter Coats 1.28 15,000 1,500 100 2

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✓ Correct answer: C. 128 To calculate the safety stock, multiply the safety factor by the standard deviation of the lead time. Safety stock = $$1.28 \times 100$$ Safety stock = 128

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