Run out of headphones before the order arrives

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Reference no: EM132260453

Inventory Management I (12 points) As the owner of Wildstyle Music you would like to develop an inventory ordering policy which has at most a 10% probability of stocking out. Expected demand for professional mixing headphones is 2190 per year. The store is open 365 days per year. Every two weeks inventory is counted and a new order is placed. It takes 10 days for the headphones to be delivered. Standard deviation of demand for the headphones is 7 per week. There are currently 65 pairs of headphones in the store.

Question:

Suppose you placed the order in part (a) with the supplier yesterday, but today, you receive a call from your supplier saying that the order will be de- layed by one day and will be sent out today instead of yesterday. After hanging up the phone, you check the inventory of strings and find that, fortunately, yes- terday’s demand was only 2 headphones. What is the probability that Wildstyle Music will run out of headphones before the order arrives?

Reference no: EM132260453

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