Answered: A retailer has 7 stores in different…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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A retailer has 7 stores in different cities in northern Ontario. The weekly demand for each store follows the normal distribution with a mean value of 60 and a standard deviation of 10. The retailer is planning to use a single centralized store in northern Ontario and they think the demand in the single store will be equal to the sum of the demand in all 7 cities. It takes 3 weeks for the supplier to send the products to the retailer. Calculate the safety stock for the centralized and decentralized cases if the correlation of demands between different cities is 0.3. Assume the planned customer service level is 98%.

Please post answer in excel showing formula and answer

Features Features Normal distribution is characterized by two parameters, mean (µ) and standard deviation (σ). When graphed, the mean represents the center of the bell curve and the graph is perfectly symmetric about the center. The mean, median, and mode are all equal for a normal distribution. The standard deviation measures the data's spread from the center. The higher the standard deviation, the more the data is spread out and the flatter the bell curve looks. Variance is another commonly used measure of the spread of the distribution and is equal to the square of the standard deviation.

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