Alfa Inc. uses a 2-week periodic review for its notebook store inventory. Mean and standard deviation of weekly sales are 16 and 5 respectively. The lead time is 3 days. The mean and standard deviation of lead-time demand are 8 and 3.5 respectively.
1. What is the mean and standard deviation of demand during the review period plus the lead-time period?
2. Assuming that the demand has a normal probability distribution, what is the replenishment level that will provide an expected stockout rate of one per year?
3. If there are 18 notebooks in the inventory, how many notebooks should be ordered?