Nationwide Auto Parts uses a periodic review inventory control system for one of

Question

Nationwide Auto Parts uses a periodic review inventory control system for one of its stock items. The review interval is 9 weeks, and the lead time for receiving the materials ordered from its wholesaler is 5 weeks. Weekly demand is normally distributed, with a mean of 150 units and a standard deviation of 30 units. Refer to the standard normal table for z-values a. What is the average and the standard deviation of demand during the protection interval? The average demand during the protection interval isunis. (Enter your response as an integer.)

Explanation / Answer

Following are given :

Review interval = I = 9 weeks

Lead time for receiving material = L = 5 weeks

Therefore ,

Protection Interval = P = I + L = 9 + 5 = 14 weeks

Thus,

Average demand during protection Interval

= Average weekly demand x Protection Interval ( weeks )

= 150 x 14

= 2100 units

Standard deviation of demand during protection interval

= Standard deviation weekly demand x Square root ( Protection interval )

= 30 x Square root ( 14 )

= 30 x 3.741

= 112.23

AVERAGE DEMAND DURING PROTECTION INTERVAL = 2100 UNITS

STANDARD DEVIATION O DEMAND DURING PROTECTION INTERVAL = 112.23

AVERAGE DEMAND DURING PROTECTION INTERVAL = 2100 UNITS

STANDARD DEVIATION O DEMAND DURING PROTECTION INTERVAL = 112.23

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