One item a computer store sells is supplied by a vendor who handles only that item. Demand for that item recently changed, and the store manager must determine when to replenish it. The manager wants a probability of at least 96 percent of not having a stockout during lead time. The manager expects demand to average a dozen units a day and have a standard deviation of 2 units a day. Lead time is variable, averaging four days with a standard deviation of one day. Assume normality and that seasonality is not a factor. a. When should the manager reorder to achieve the desired probability? b.Why might the model not be appropriate if seasonality was present?

A First Course in Probability (10th Edition)
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Chapter1: Combinatorial Analysis
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One item a computer store sells is supplied by a vendor who handles only that item. Demand for that item recently
changed, and the store manager must determine when to replenish it. The manager wants a probability of at least 96
percent of not having a stockout during lead time. The manager expects demand to average a dozen units a day and have
a standard deviation of 2 units a day. Lead time is variable, averaging four days with a standard deviation of one day.
Assume normality and that seasonality is not a factor.
a. When should the manager reorder to achieve the desired probability?
b.Why might the model not be appropriate if seasonality was present?
Transcribed Image Text:One item a computer store sells is supplied by a vendor who handles only that item. Demand for that item recently changed, and the store manager must determine when to replenish it. The manager wants a probability of at least 96 percent of not having a stockout during lead time. The manager expects demand to average a dozen units a day and have a standard deviation of 2 units a day. Lead time is variable, averaging four days with a standard deviation of one day. Assume normality and that seasonality is not a factor. a. When should the manager reorder to achieve the desired probability? b.Why might the model not be appropriate if seasonality was present?
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