A hardware store rents its one wood chipper. A request for the chipper arrives e

Question

A hardware store rents its one wood chipper. A request for the chipper arrives every 4 days with a standard deviation of 4 days. On average clients rent the chipper for one day. If a request arrives and the chipper is not available, customers rent from another company. 1) What percentage of demand is lost? a)20% b)25% c)10% d) 15% 2)What is the utilization rate of the wood chipper? a)20% b)80% c)60% d)40%

(I posted this question before and the answer given twice was wrong. Here is the wrong answer: The demand can be assumed as a normal distribution with mean 4 and standard deviation of 4. Demand is lost if the demand comes in less than 1 day, since the chipper remains engaged for 1 day once a demand appears. Probability that demand < 1 = P (X<1) = P (Z < (1-4)/4) = P (Z<-0.75) = 0.22663 (Using a standard Normal table). So we can conclude that about 22.66 % demand is lost. On an average, the chipper is used for 1 day in every 4 days. So the utilisation rate = 1/4 = 0.25,or 25%) These answers are not in the answer choices, so please stop reposting the same answer.)

Explanation / Answer

The demand can be assumed as a normal distribution with mean 4 and standard deviation of 4.

Demand is lost if the demand comes in less than 1 day, since the chipper remains engaged for 1 day once a demand appears.

Probability that demand < 1 = P (X<1) = P (Z < (1-4)/4) = P (Z<-0.75) = 0.22663 (Using a standard Normal table).

So we can conclude that about 22.66 % demand is lost.

On an average, the chipper is used for 1 day in every 4 days. So the utilisation rate = 1/4 = 0.25,or 25%

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