5. You have been given the task to determine the level of inventory to match a desired service level SL.

You know that the product you are planning for is a single-period product.

You also know that the product has a demand that is normally distributed, with a mean of , and a standard deviation of .

Because it is a normal distribution, you know from Probability and Statistics, and now from Supply Chain Management, that you need to calculate the zz-value.

The following equation accurately describes the relationship between the mean, the standard deviation, the z-value, and the desired service level SL.

A. Mean + (Std. Dev) * z = SL

B. Probability of {Demand <= Mean + (Std. Dev) * z} = SL

C. z = SL

D. z = SL / (Std. Dev)

6. If you are using Microsoft Excel to calculate z, for a given target service level SL, then the appropriate formula to determine z is ______.

A. NORMDIST(SL)

B. NORMINV(SL)

C. NORMSDIST(SL)

D. NORMSINV(SL)

7. Suppose Megan decides to plan for inventory that is 2.5 standard deviations above the mean of the demand distribution.

That means, in this case, Megan planned for z = 2.5.

If Megan wants to use Microsoft Excel to determine the service level that will be achieved by this z, the appropriate formula to use is:

A. normdist(2.5)

B. norminv(2.5)

C. normsdist(2.5)

D. normsinv(2.5)

8. By choosing a higher value of z, we will achieve the following: ___________.

A. higher inventory, higher service level

B. lower inventory, higher service level

C. higher inventory, lower service level

D. lower inventory, lower service level