A gourmet food store uses a one-week periodic review system for its supply of coffee beans. There is a five-day lead time for orders, and the store will allow two stockouts per year
a. What is the probability of a stockout associated with each replenishment decision?
b. What is the replenishment level if demand during the review and lead-time periods is normally distributed with mean 120 pounds and standard deviation 8 pounds?
c. How many pounds of beans should be ordered if there are 42 pounds of beans on hand?
a. 2/52 = .0385
b. M = 120 + 1.77 (8) = 134.16
c. 134 ? 40 = 94
Business
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