Weekly demand for a product is normally distributed with a mean and standard dev
ID: 360649 • Letter: W
Question
Weekly demand for a product is normally distributed with a mean and standard deviation of 3,211 and 484 units, respectively. What is the probability that weekly demand exceeds 4,044?
Greater than or equal to .97 and less than or equal to .98
Greater than or equal to .95 and less than or equal to .96
Greater than or equal to .04 and less than or equal to .05
Greater than or equal to .06 and less than or equal to .07
How is the economic order quantity affected if the ordering cost decreases and everything else remains constant?
it decreases
It increases
it stays the same
none of the above
a)Greater than or equal to .97 and less than or equal to .98
b)Greater than or equal to .95 and less than or equal to .96
c)Greater than or equal to .04 and less than or equal to .05
d)Greater than or equal to .06 and less than or equal to .07
Explanation / Answer
1. Weekly demand for a product is normally distributed with a mean and standard deviation of 3,211 and 484 units, respectively. What is the probability that weekly demand exceeds 4,044?
Answer: (b) Greater than or equal to .95 and less than or equal to .96
Z= (X-mean)/standard deviation = (4044 - 3211)/484 =1.721, now looking for standard normal distribution table 1.7 from row, we get values from 0.9554 till 0.9633, for column 0.02 it is 0.9573, so it is greater than or equal to .95 and less than or equal to .96
2. How is the economic order quantity affected if the ordering cost decreases and everything else remains constant?
Answer: (a) it decreases
EOQ will decrease as EOQ = Root of Ordering Cost if everything else is constant. For example, if ordering cost is 9, then EOQ is 3 keeping all constant. if it decreases to 4 then EOQ is 2 which decreases.
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