A drugstore uses fixed- order cycles for many of the items it stocks. The manager wants a

Question:

A drugstore uses fixed- order cycles for many of the items it stocks. The manager wants a service level of .98. The order interval is 14 days, and lead time is 2 days. Average demand for one item is 40 units per day, and the standard deviation of demand is 3 units per day. Given the on- hand inventory at the reorder time for each order cycle shown in the following table, determine the order quantities for cycles 1, 2, and 3:
Cycle On Hand
1 ........ 42
2 ........ 8
3 ........ 103