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What is the average and the standard deviation of demand during the protection period?
Maruti Suzuki uses a periodic review inventory control system for one of its stock items with review interval 5 weeks, and the lead time for receiving the materials ordered from its wholesaler is 2 weeks. Weekly demand is normally distributed, with a mean of 150 units and a standard deviation of 30 units.
(a) What is the time interval, i.e., protection period, during which the company faces a risk of stockout?
(c) If the company aims 98.5 percent stockout protection, what should be the target inventory level?
(d) Given 300 units were on hand at the time of a periodic review, how many units should be ordered?
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