OM
Nationwide Auto Parts uses a periodic review inventory
control system for one of its stock items. The review interval
is 6 weeks, and the lead time for receiving the materials
ordered from its wholesaler is 3 weeks. Weekly demand is
normally distributed, with a mean of 100 units and a standard
deviation of 20 units.
a. What is the average and the standard deviation of
demand during the protection interval?
b. What should be the target inventory level if the firm
desires 97.5 percent stockout protection?
c. If 350 units were in stock at the time of a periodic
review, how many units should be ordered?
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