Managing Supply Chain and Operations 1st Edition by Thomas Foster ,Scott Sampson,Cynthia Wallin,Scott Webb

Exercise 29

A hair salon orders shampoo every week from its supplier. The salon uses the periodic review model to determine the quantity to order weekly. The supplier ships the product from its warehouse in the Midwest, and the lead time to receive an order of shampoo is three weeks. Having enough shampoo is critical to the hair salon, so it wants an order quantity that will ensure that a stockout occurs no more than 1% of the time. If the salon uses 70 bottles of shampoo on average every week with a daily standard deviation of demand of 10 bottles over a four-week period, how many bottles of shampoo should be ordered this week if five bottles are on hand?