Hi, ‘Standard Deviation’ used as part of a formula to calculate the new minimum order for an item. What is an items standard deviation and how is it calculated?
Formula is:
Details of the calculation follow:
Minimum inventory level = safety factorstandard deviation per monthsquare root (total lead time / 30 days)
Sorry, am on a very step learning curve, hope someone can help
Thanks
It is basic maths used in statistical analysis. Difference from the average. If it is low it means the data points are close to the average, if high they are far away and the results are very sporadic. Or it may be the other way around, it has been a long time since school and statistics!
Thanks …put me in the right direction … found this useful:
http://www.emathzone.com/tutorials/basic-statistics/examples-of-standard-deviation.html
And like you said, ‘long time since school’