Daily demand in pallets for a particular product made for a particular customer is distributed as follows: (5, 75%), (6, 18%), (7, 7%)
a. How many pallets should be kept in inventory for a 90% service level? For a 95% service level?
b. Compute the 2-day distribution of demand.
c. Suppose the inventory can only be re-supplied every 2-days. How many pallets should be kept in inventory for each of the following service levels: 90%, 95%, 99%, and 99.5%?
d. Suppose the inventory replenishment is unreliable. The replenishment occurs in one day 75% of the time and in 2 days 25% of the time. How many pallets should be kept in inventory for each of the following service levels: 90% and 99%?