The Recently Hired Floor Manager at the Local Store of a National

question 46

Essay

The recently hired floor manager at the local store of a national home improvement chain is studying their inventory system.He has chosen patio blocks to be the first item examined.The historical supply and demand data for this item has indicated a constant lead time of 16 days.Demand per day (d) is normally distributed with a mean demand of 2000 per day and standard deviation of 240 per day.He plans to set the service level at 90% during lead time.
a.What is the average demand during lead time?
b.What is the amount of safety stock of blocks he should keep on hand?
c.What is the order point he should use?

---

Definitions:

Alpha

Alpha, often represented as α, is the threshold probability of committing a Type I Error, typically set at 0.05 or 5% in hypothesis testing.

T-statistic

The T-statistic is a ratio used in hypothesis testing that compares the difference between an observed sample mean and a known value, to the standard error of the mean.

Null Hypothesis

A default hypothesis that there is no significant difference or effect, typically set against the alternative hypothesis in statistical testing.

Alpha

A coefficient used in statistics that represents the level of significance, often denoted as the probability of rejecting a true null hypothesis.