Safety stock= (standard deviation)*(service factor) *(lead time factor)
Safety stock = 7*1.28*60
In the above calculation, I have used statistical model of Standard Deviation of a Normal Distribution of numbers to determine the probability. In my calculations, I have used a simple formula which involves the multiplication of standard deviation to service factor and then lead time factor. Service factor is used as a multiplier with the Standard Deviation to calculate the specific quantity to meet the specified service level. To arrive at my service factor I have used excel function NORMSINV to convert the service Continue reading...