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In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. What is the standard deviation of demand during lead time

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Answer: 154 units

Explanation:

Standard deviation of demand during lead time = √[(Mean lead time * Standard deviation of demand ²) + (Mean demand * standard deviation of lead time²)]

= √ [ ( 5 * 16²) + (150² * 1²)]

= √[ 1,280 + 22,500]

= 154.20765

= 154 units

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