Question: Dunstreet's Department Store would like to develop an inventory ordering policy of a 99 percent probability of not stocking out. To illustrate your recommended procedure, use as an example the ordering policy for white percale sheets.
Demand for white percale sheets is 4,600 per year. The store is open 365 days per year. Every three weeks (21 days) inventory is counted and a new order is placed. It takes 10 days for the sheets to be delivered. Standard deviation of demand for the sheets is eight per day. There are currently 200 sheets on hand.
How many sheets should you order?