One important factor in inventory control is the variance of the daily demand for the product....

One important factor in inventory control is the variance of the daily demand for the product. A management scientist has developed the optimal order quantity and reorder point, assuming that the variance is equal to 250. Recently, the company has experienced some inventory problems, which induced the operations manager to doubt the assumption. To examine the problem, the manager took a sample of 25 days and recorded the demand.

a. Do these data provide sufficient evidence at the 10% significance level to infer that the management scientist’s assumption about the variance is wrong?

b. What is the required condition for the statistical procedure in part (a)?

c. Estimate with 95% confidence the variance of the daily demand for the product.

Demand
188
212
176
213
182
203
185
214
213
209
199
229
217
183
205
159
208
189
203
220
198
224
194
213
204

Expert Solution

Solution:

Part A and B:

Part C:

End...

orchestra answered 2 years ago

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