given the following inventory system: average weekly (7 days a week) demand is 1000 units with a standard deviation of 100 units, review period is 28 days (4 weeks), lead time is 14 days (2 weeks) and the target service probability is 90%. what is the appropriate level of safety stock?

Safety stock is an additional amount of a product that is kept in the warehouse to avoid running out of stock. It acts as protection against shifts in demand.

Running out of stock is made easier by having safety stock. If you have enough safety stock on hand, you won't need to rely on your suppliers' prompt deliveries or turn away clients because of low stock levels.

We have the following data with which we are to solve the problem that we have here

The daily demand = 1000

The standard deviation of the daily demand = 100

The review period = 4 weeks

The lead time is given as 2 weeks

We have to find the Z critical value at 90 percent level of confidence. This is given as 1.28

The formula for the safety shock is given as:

zo√L+P

We would have to put in the values in the formula such that we would have

1.28 x 100 x √4+2 = 313.53

Hence the safety shock would be approximated to 314

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