Question
A local shop sells auto parts and supplies including a multi-grade motor oil. When the stock of this oil drops to 20 gallons, a replenishment
A local shop sells auto parts and supplies including a multi-grade motor oil. When the stock of this oil drops to 20 gallons, a replenishment order is placed. The store manager is concerned that sales are being lost due to stockouts while waiting for an order. It has been determined that demand during replenishment lead-time is normally distributed with a mean of 15 gallons and a standard deviation of 6 gallons. part a) What is the random variable in the above described scenario? part b) The manager would like to know the probability of a stockout. [Hint, this translates to P(X>20)] part c) If the manager of the store wants a stockout probability of no more 5%, what should the reorder point be?
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