Question: Consider a retail store that uses the order - up - to model when ordering from its supplier. Orders are placed at the beginning of

Consider a retail store that uses the order-up-to model when ordering from its supplier. Orders are placed at the beginning of each week and received with a 4-week lead time. Weekly demand follows a Poisson distribution with mean 0.8.
[4 points] What is the average on-order inventory when the retail store uses an order-up-to level of S=10?
b.[4 points] What is the average on-hand inventory when the retailer store uses an order-up-to level of S=10?
c. what is the minimum order-up-to level required to achieve an in-stock probability of at least 99.99%?
d.[6 points] Suppose that parent company of this retail store has 16 identical retail stores each facing the same demand as above and their inveinventorytory is pooled. So, instead of each store ordering and holding its own inventory, inventory is shared from a common pool of inventory. What is the on-hand inventory to achieve an in=stock probability of at least 99.99%? Compare it to the toal on-hand inventory with 16 stores but without pooling (so,16 times the on-hand inventory corresponding to your answer in part c) and explain the difference.

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