Confidence interval for policy of replenishment of fluid

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Reference no: EM13100590

At a maintenance facility the standard policy with respect to the replenishment of a particular fluid is:

When the amount of fluid remaining drops to 100 litres a replenishment order is placed and during the time the replenishment is on order the demand is exponential with 1/lambda = 80 litres

a. What is the probability that there will be a stock out?

b. Given that you, the maintenance officer at the facility, want the probability of a stock out to be no more than 5% what should the reorder point be?

c. Suppose now that you will do an analysis of the mean demand and you have gathered the following data on the demand during a replenishment cycle.

86,70,95,78,91,62,96

What is the 95% confidence interval on the mean demand?

Reference no: EM13100590

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