Question

Demand for walnut fudge ice cream at the Sweet Cream Dairy can be approximated by a normal distribution with a mean of 25 gallons per week and a standard deviation of 3.4 gallons per week. The new manager desires a service level of 90 percent. Lead time is two days, and the dairy is open seven days a week. (Hint: Work in terms of weeks.)
Use Table B and Table B1.

b-2. What is the probability of experiencing a stockout before this order arrives? (Do not round intermediate calculations. Round your final answer to the nearest whole percent. Omit the "%" sign in your response.)

Probability: _______%

c. Suppose the manager is using the ROP model described in part a. One day after placing an order with the supplier, the manager receives a call from the supplier that the order will be delayed because of problems at the supplier’s plant. The supplier promises to have the order there in two days. After hanging up, the manager checks the supply of walnut fudge ice cream and finds that 2 gallons have been sold since the order was placed. Assuming the supplier’s promise is valid, what is the probability that the dairy will run out of this flavor before the shipment arrives? (Do not round intermediate calculations. Round your final answer to the nearest whole percent. Omit the "%" sign in your response.)

Risk probability: _______%

Answer 1