Nationwide Auto Parts uses a periodic review inventory control system for one of its stock items. The review interval is six weeks, and the lead time for receiving the materials ordered from its wholesaler is three weeks. Weekly demand is normally distributed, with mean of 100 units and a standard deviation 20 units.
a) What are the average and the standard deviation of demand during the protection interval?
b) What should be the target inventory level if the firm desires 97.5 percent stock-out protection?
c) If 350 units were in stock at the time of a certain periodic review, how many units should be ordered?