A Gourmet Food Store Uses a One-Week Periodic Review System

question 10

Essay

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?

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