What is probability that spare part will have stockout

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Reference no: EM132222706

1. Company arts spare parts ’The car uses a 4-week periodic review system to carry out order reorder’ of spare parts for its stock inventory needs. The lead time to fill orders takes 1 week. Demand for a particular part of filling for a period of 5 weeks is normally distributed with an average of 18 units and a standard deviation of 6 units.

a. At certain periodic reviews, 8 units are in inventory. The manager in charge of spare parts places orders for 16 units. What is the probability that the spare part will have a stockout before the next 4-week order period arrives?

b. Assume that the company is willing to tolerate 2.5% of the stockout related to the filling decision. How many spare parts must the manager order (a)? What is the filling rate for 4 weeks periodic review system?

Reference no: EM132222706

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