Standard deviation of the demand at the central warehouse

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Reference no: EM13965898

An online bookstore has four warehouses serving the southwest area. Weekly demand at each warehouse is independent and normally distributed with a mean of 500 and standard deviation of 150. The lead time is two weeks. The bookstore's target service level is 95%, which implies that z=1.64. The bookstore is considering centralizing its inventory at the four warehouses into a single central warehouse while targeting the same service level.

1. What is the average demand and standard deviation of the demand at the central warehouse?

2. If the bookstore places an order every Monday, the appropriate amount of safety stock at the central warehouse should be...?

Reference no: EM13965898

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