The Rugged Jeans Company uses on average 20 rolls of denim daily in its manufacturing process. The amount of denim used is normally distributed with a standard deviation of 4 rolls. The company orders denim from is supplier every 7 days on monday morning and it takes 2 days to receive the order . One Monday morning, the company has 5 rolls of denim in the inventory. Rugged Jeans would like to limit the probability of a stockout to 10%.
What type of inventory model is suitable for this problem?
a) Basic EOQ model.
b) Economic Production Quantity (EPQ) model.
c) (Q.R.) model with random demand.
d) Peropdic Review model.
2. How many rolls of denim should be ordered at this time?
a) 190
b) 195
c) 200
d) 203
3. What is the safety stock for the denim used?
a) 28 rolls
b) 25 rolls
c) 20 rolls
d) 15 rolls
3. If instead the store wants to reduce the probability of a stockout to 2%, how many rolls of denim should be ordered?
a) 190 rolls
b) 195 rolls
c) 200 rolls
d) 203 rolls