What is probability of a stock-out on any given order cycle

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A product with an annual demand of 1150 units has CoChµσ = $22.5 and = $7. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with = 29 and = 7.

problem 1: What is the recommended order quantity? If required, round your answer to two decimal places.

problem 2: What are the reorder point and safety stock if the firm desires at most a 3% probability of stock-out on any given order cycle? If required, round your answers to the nearest whole number.

problem 3: If a manager sets the reorder point at 34, what is the probability of a stock-out on any given order cycle? If required, round your answer to four decimal places.

problem 4: How many times would you expect a stock-out during the year if this reorder point were used?

Reference no: EM132781149

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