SOLUTION: C-2. [20] Acme Copier Supplies currently supplies copier paper from two warehouses. Warehouse A experiences demands that are normally distributed with a mean of 30,000 cases per we

Question 735635: C-2. [20] Acme Copier Supplies currently supplies copier paper from two warehouses. Warehouse A experiences demands that are normally distributed with a mean of 30,000 cases per week and a standard deviation of 5,000 cases per week. Warehouse B experiences demands that are normally distributed with a mean of 30,000 cases per week and a standard deviation of 8,000 cases per week. The two warehouses are
resupplied only once per week. [20 marks total]
(a) What is the probability that demand at Warehouse A exceeds 32,500 cases?
[4 marks]
(b) What is the stock level required at Warehouse A that will meet weekly demand
95% of the time? [4 marks]
(c) What is the stock level required at Warehouse B that will meet weekly demand 95%
of the time? [4 marks]
(d) Acme has the opportunity to consolidate the two warehouses into a single warehouse. Suppose that weekly demand at the two warehouses is independent. If
they wish to stock a single warehouse so that weekly demand will be met 95% of the
time, how much should they stock? From an inventory point of view, does it make
sense to consolidate the warehouses (i.e. does the total inventory stock decrease)?
[4 marks]
(e) How does your answer to (d) change if the correlation between demands at the
two warehouses is +0.6875?
Answer by lynnlo(4176) (Show Source): You can put this solution on YOUR website!

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