AutoZone Auto Parts uses a periodic-review inventory-control system for one of its stock items. The review interval is set at four weeks, and the lead time for receiving the materials ordered from its wholesaler is two weeks. Weekly demand is normally distributed, with a mean of 250 units and a standard deviation of 50 units.
a. What are the smoothed average and the standard deviation of demand during the protection interval?
b. What should be the target inventory level if the firm desires 98.2 percent stock out protection?
c. If 150 units were in stock at the time of a periodic review, how many units should be ordered?