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 is 2100 units. (Enter your response as an integer.) The standard deviation of demand is 112.23 units. (Enter your response rounded to two decimal places.) b. If the firm desires 98 percent stockout protection, the target inventory level is units. (Enter your response rounded to the nearest whole number.)

Explanation / Answer

b- The firm desires 98% of stockout prtection, so the target inventory level should be 98% of the average demand during the protection interval.It should be 98%*2100=2058 units.

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