3. The daily demand for camera films at a gift shop in a resort area is normally...
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3. The daily demand for camera films at a gift shop in a resort area is normally distributed with mean 300 rolls and standard deviation 5 rolls. The cost of holding a roll in the shop is
$.02. A fixed cost of $30 is incurred each time a new order of films is placed by the shop.
The shop's inventory policy calls for ordering 150 rolls whenever the inventory level drops to 80 units while simultaneously maintaining a constant buffer of 20 rolls at all times.
(a) For the stated inventory policy, determine the probability of running out of stock during lead time.
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