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A manufacturer of personal computers [PC] has modeled its weekly demand for a particular disk drive that is used as a component in the PC
A manufacturer of personal computers [PC] has modeled its weekly demand for a particular disk drive that is used as a component in the PC using a normal distribution with mean 38 and variance 130. The lead time is 3 weeks to acquire the drives from the drive manufacturer. The PC manufacturer uses a 40% annual interest rate to compute holding costs. The drives cost $18.80 each, the order cost is $75 per order, and the penalty for stock-out is currently $400 per drive
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