Question: A maintenance manager has implemented a system for managing the inventory of bulk oil that they use in equipment maintenance, whereby every second Monday they
A maintenance manager has implemented a system for managing the inventory of bulk oil that they use in equipment maintenance, wherebyevery second Monday they check the amount of oil on hand and order more; the replenishment order will then arrive one week later. They have determined that weekly demand averages 300 litres, with a standard deviation of 75 litres. Each litre costs $2.25; the manager wishes to be 97% sure that they dont stock out in a given order cycle. If there are 100 litres on hand on a given Monday in which they are to place an order, how many litres should they order?
| a. | 565 | |
| b. | 732 | |
| c. | 875 | |
| d. | 1,032 | |
| e. | 1,045 |
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