Question

In: Economics

A firm manufactures and sells masks for protection. The firm delivers directly from its 15 distribution...

A firm manufactures and sells masks for protection. The firm delivers directly from its 15 distribution
centers. The annual demand of the centers are iid (independent and identically distributed) and follows a
normal distribution with parameters 1000 and 250. The policy of stock of the firm consists of keeping an
initial stock 1100 masks (there are not resupplies to the distribution centers during the year).
1) What is the probability of stockout at each enter?
2) What is the probability that at least 5 centers run out of stocks?
3) The firm would like to change its inventory policy. Now the firm would like that at most 3 centers
run out of stock with a probability 0.95 (or more). What is the new value of the initial stock at
each center?
4) Plot how the initial stock will vary when the expected demand increases.

Solutions

Expert Solution

Please upvote me, it took me a lot of tme to solve this

Rahul Sunny answered 2 years ago
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