Statewide Auto Parts uses a four-week periodic review system to reorder parts fo
ID: 337945 • Letter: S
Question
Statewide Auto Parts uses a four-week periodic review system to reorder parts for its inventory stock. A one-week lead time is required to fill the order. Demand for one particular part during the five-week replenishment period is normally distributed with a mean of 21 units and a standard deviation of 7 units.
a) At a particular periodic review, 10 units are in inventory. The parts manager places an order for 16 units. What is the probability that this part will have a stock-out before an order that is placed at the next four-week review period arrives? If required, round your answer to four decimal places.
b) Assume that the company is willing to tolerate a 2.3% chance of a stock-out associated with a replenishment decision. How many parts should the manager have ordered in part (a)? If required, round your answer to the nearest whole number.
The manager should have ordered __ units.
What is the replenishment level for the four-week periodic review system?
The replenishment level for the four-week periodic review system is __.
Explanation / Answer
Statewide Auto Parts uses a four-week periodic review system to reorder parts for its inventory stock. A one-week lead time is required to fill the order. Demand for one particular part during the five-week replenishment period is normally distributed with a mean of 21 units and a standard deviation of 7 units.
a) At a particular periodic review, 10 units are in inventory. The parts manager places an order for 16 units. What is the probability that this part will have a stock-out before an order that is placed at the next four-week review period arrives? If required, round your answer to four decimal places.
b) Assume that the company is willing to tolerate a 2.3% chance of a stock-out associated with a replenishment decision. How many parts should the manager have ordered in part (a)? If required, round your answer to the nearest whole number.
The manager should have ordered __ units.
What is the replenishment level for the four-week periodic review system?
The replenishment level for the four-week periodic review system is __.
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