BADM 7120: Operations Management Inventories P-System with Probabilistic Demand Example Problem #3: Statewide Auto Parts uses...

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BADM 7120: Operations Management Inventories P-System with Probabilistic Demand Example Problem #3: Statewide Auto Parts uses a four-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 six units. Determine the following: A. At a particular periodic review, eight units are in inventory. The parts manager places an order for 16 units. What is the probability that this part will have a stock-out before an order that is placed at the next four-week review period arrives? B. Assume that the company is willing to tolerate a 2.5% chance of a stock-out associated with a replenishment decision. How many parts should the manager have ordered in part (A) above? What is the replenishment level for the four-week periodic review system? BADM 7120: Operations Management Inventories P-System with Probabilistic Demand Example Problem #3: Statewide Auto Parts uses a four-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 six units. Determine the following: A. At a particular periodic review, eight units are in inventory. The parts manager places an order for 16 units. What is the probability that this part will have a stock-out before an order that is placed at the next four-week review period arrives? B. Assume that the company is willing to tolerate a 2.5% chance of a stock-out associated with a replenishment decision. How many parts should the manager have ordered in part (A) above? What is the replenishment level for the four-week periodic review system?