A wholesale warehouse has a variable demand for one of its product lines. Past records suggest that the weekly demand is appriximately normal with a mean of 500 units with a standard deviation of 80.
a) the warehouse has 600 units in stock and the next delivery is expected in a week's time. Estimate the probability of the warehouse running out of stock before the next delivery arrives
b) In future the warehouse wants to place an order for this product from its suppluer when the stock level falls to a pre-determined level. The lead time (between placing and recieveing an order) is one week. The probaility of running out in any lead time is to be no more than 0.05. What should the reorder level be if the pattern of demand stays the same?
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