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Table 6.8 Decision rules to compute standard deviation of lead time demand If demand period is smaller Use Eq. 6.6 to compute standard deviation of lead time demand than lead time If demand period is greater Use Eq. 6.7 to compute standard deviation of lead time demand than lead time Case 2: Demand period is greater than lead time Consider a problem where the demand period is greater than lead time (e.g. demand is annual and lead time is specified in days). If the standard deviation of demand period is given and we need to determine the standard deviation of lead time demand, we can use the following: h34 (6.7) where n is the number of lead time periods that make up the demand period. For example, if demand period is in months and lead time is in weeks, then n=4 (i.e.. 4 weeks make up a month). General rules to be followed are shown in Table 6.8 Solved Problem 6.3 The daily demand for an item is normally distributed with a mean of 100 units and a standard deviation of 3 units. If the procurement lead time is 6 days, compute the standard deviation of lead time demand