After graduation, you decide to go into a partnership in an offi ce supply store that has existed for a number of years. Walking through the store and stockrooms, you fi nd a great discrepancy in service levels. Some spaces and bins for items are completely empty; others have supplies that are covered with dust and have obviously been there a long time. You decide to take on the project of establishing consistent levels of inventory to meet customer demands. Most of your supplies are purchased from just a few distributors that call on your store once
every two weeks. You choose, as your fi rst item for study, computer printer paper. You examine the sales records and purchase orders and fi nd that demand for the past 12 months was 5,000 boxes. Using your calculator you sample some days' demands and estimate that the standard deviation of daily demand is 10 boxes. You also search out these fi gures: Cost per box of paper: $11. Desired service probability: 98 percent. Store is open every day. Salesperson visits every two weeks. Delivery time following visit is three days. Using your procedure, how many boxes of paper would be ordered if, on the day the salesperson calls, 60 boxes are on hand?