Question
Tamiflu has estimated that demand for doses of the vaccine this year would be normally distributed with a mean of 1 million doses and a
Tamiflu has estimated that demand for doses of the vaccine this year would be normally distributed with a mean of 1 million doses and a standard deviation of 300,000 doses. In making a decision on how many doses to supply for the coming years flue season, Tamiflu executives felt the only downside cost of not supplying enough doses would be bad PR in the North American press (The process of providing vaccines involves forecasting demand far ahead of an outbreak, since doses of a vaccine take many months to produce). The Tamiflu manufacturing team estimated this cost to be 1 dollar per person who needed the vaccine but could not get one. Each dose cost Tamiflu 2 dollars to produce and ship to another country (Country A) which recently experienced a flu pandemic (the country is remote) for the first time. Unused vaccines become ineffective and must be written off at 100 per cent of the cost of production.
Based on Tamiflus cost estimates, what is their optimum service level for doses of the flu vaccine supplied to Country A?
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