Dr. Jack is in charge of the Springfield Hospital's Blood Center. Blood is collected in the regional Blood Center 200 miles away and delivered to Springfield by airplane. Dr. Jack reviews blood reserves and places orders every Monday morning for delivery the following Monday morning. If demand begins to exceed supply, surgeons postpone non-urgent procedures, in which case blood is back-ordered. Demand for blood on every given week is normal with mean 100 pints and standard deviation 34 pints. Demand is independent across weeks.
a. On Monday morning, Dr. Jack reviews his reserves and observes 200 pints in on-hand inventory, no back orders, and 73 pints in pipeline inventory. Suppose his order-up-to level is 285. How many pints will he order? Choose the closest answer.
b. Dr. Jack targets a 99 percent in-stock probability. What order-up-to level should he choose? Choose the closest answer.
c. Dr. Jack is planning to implement a computer system that will allow daily ordering (seven days per week) and the lead time to receive orders will be one day. What will be the average order quantity?