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National Auto parts uses a 4-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 18 units and a standard deviation of 6 units. 1.At a particular periodic review, 8 units are in inventory. The parts manager places an order for 16 units. What is the probability that this part will have a stockout before an order that is placed at the next 4-week review period arrives? 2. Assume that the company is willing to tolerate a 2.5% chance of stockout associated with a replenishment decision. What is the replenishment level for the 4-week periodic review system? 3.How many parts should the manager have ordered in part (1)?

National Auto parts uses a 4-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 18 units and a standard deviation of 6 units. 1.At a particular periodic review, 8 units are in inventory. The parts manager places an order for 16 units. What is the probability that this part will have a stockout before an order that is placed at the next 4-week review period arrives? 2. Assume that the company is willing to tolerate a 2.5% chance of stockout associated with a replenishment decision. What is the replenishment level for the 4-week periodic review system? 3.How many parts should the manager have ordered in part (1)?

Practical Management Science
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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National Auto parts uses a 4-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 18 units and a standard deviation of 6 units. 1.At a particular periodic review, 8 units are in inventory. The parts manager places an order for 16 units. What is the probability that this part will have a stockout before an order that is placed at the next 4-week review period arrives? 2. Assume that the company is willing to tolerate a 2.5% chance of stockout associated with a replenishment decision. What is the replenishment level for the 4-week periodic review system? 3.How many parts should the manager have ordered in part (1)?
Transcribed Image Text:National Auto parts uses a 4-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 18 units and a standard deviation of 6 units. 1.At a particular periodic review, 8 units are in inventory. The parts manager places an order for 16 units. What is the probability that this part will have a stockout before an order that is placed at the next 4-week review period arrives? 2. Assume that the company is willing to tolerate a 2.5% chance of stockout associated with a replenishment decision. What is the replenishment level for the 4-week periodic review system? 3.How many parts should the manager have ordered in part (1)?
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