Determine the desired inventory level for component

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Question: You are in charge of component inventory control. Your firm produces end items P1 and P2, which share a common component C. You need two components C for each piece of type P1 and three components for each piece of type P2· Over the next time period, demand is uncertain and modeled by a normal distribution. Demand for item P1 has expected value 1000 and standard deviation 250; the corresponding values for P2 are 700 and 180. Assuming that the two demands are independent, determine the desired inventory level for component C in such a way that its service level is 92%.

Reference no: EM131448085

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