B Com Exam  >  B Com Questions  >  The average demand rute for a particular raw ... Start Learning for Free
The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d?
Most Upvoted Answer
The average demand rute for a particular raw material for a company is...
Analysis of Raw Material Demand and Procurement


Demand Rate


  • The average demand rate for the raw material is 1000 times per month

  • The distribution of demand rate is normally distributed with a standard deviation of 200



Lead Time


  • The average load time for the procurement of the raw material is approximately 3 months

  • The normally approximated lead times have a standard deviation of 1 month



Service Level


  • The service level is to be 95%



Explanation

To ensure a service level of 95%, the company needs to maintain enough inventory to cover the demand during the lead time. The safety stock required can be calculated using the following formula:

Safety Stock = Z x Standard Deviation x Square Root of Lead Time

Where Z is the number of standard deviations required for the desired service level. For a 95% service level, Z is 1.65.

Using the above formula, the safety stock for the raw material can be calculated as:

Safety Stock = 1.65 x 200 x Square Root of 3
= 581.94

Therefore, the company needs to maintain a safety stock of 582 units to ensure a service level of 95%. This safety stock can be added to the reorder point, which is the level of inventory at which the company needs to place an order for the raw material.

In conclusion, the company needs to maintain a safety stock of 582 units to ensure a service level of 95% for the raw material. This will help the company to avoid stockouts and ensure timely procurement of the raw material.
Explore Courses for B Com exam
The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d?
Question Description
The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d?.
Solutions for The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d? in English & in Hindi are available as part of our courses for B Com. Download more important topics, notes, lectures and mock test series for B Com Exam by signing up for free.
Here you can find the meaning of The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d? defined & explained in the simplest way possible. Besides giving the explanation of The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d?, a detailed solution for The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d? has been provided alongside types of The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d? theory, EduRev gives you an ample number of questions to practice The average demand rute for a particular raw material for a company is estimated to be 1000 times per month. The distribution of demand rate is found to be normally distributed with a standard deviation of 200. the average load time for the procurement of the raw material has been observed in the past to be approximately 3 months and the normally approximated lead times have a standard deviation of month. If the service label is to be 95% d? tests, examples and also practice B Com tests.
Explore Courses for B Com exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev