Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 4

The Impanema Restaurant stocks a red Brazilian table wine it purchases from a wine merchant in a nearby city. The daily demand for the wine at the restaurant is normally distributed, with a mean of 18 bottles and a standard deviation of 4 bottles. The wine merchant sends a representative to check the restaurant's wine cellar every 30 days, and during a recent visit, there were 25 bottles in stock. The lead time to receive an order is 2 days. The restaurant manager has requested an order size that will enable him to limit the probability of a stockout to 2%. Determine the order size.