Question: 8. Let us consider a one period inventory decision for an item whose demand is Normally distributed with mean 1000 units and standard deviation 150

Let us consider a one period inventory decision for an item whose demand is Normally distributed with mean 1000 units and standard deviation 150 units. The cost of manufacturing the item is $15 per unit and the selling price of the item is $25. What is the optimal stocking quantity that maximizes the expected profit?

1000

962

1024

150

Consider a periodic review policy with normally distributed demand with a mean daily demand of 1000 units and a standard deviation of daily demand of 100 units. The lead-time of delivery is 9 days. The review period is 16 days. Take Z= 1.97. What is the base stock of the inventory system?

985

25,000

25,985

9,000

10.

The daily demand for a product is Normally distributed with mean 100 units per day and standard deviation 25 units. The lead time of delivery of the product is 5 days. The manager changed the review policy from a continuous review policy to a base stock (periodic) review policy, where the manager reviews the inventory every 10 days. The service level is 95% (z_0.95=1.64). What is the increase in safety stock due to the change in review policy? (rounded to the nearest integer)

40 units

159 units

92 units

67 units

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