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Anvils Works' requires, on average, 2,500 tons of aluminum each week, with a standard deviation of 800 tons. The lead time to receive its orders is 11 weeks. The holding cost for one ton of aluminum for one week is $11. It operates with a 0.98 in-stock probability. Use Table 11.5.
Suppose its on-hand inventory is 5050 tons, on average. What in-stock probability does it offer to its customers?

Answer :

Parrain

Based on the inventory on hand, the lead time, and the standard deviation, the in-stock probability will be 96.56%

What is the in-stock probability?

To find the in-stock probability, you first need to find the Z score as:

= On-hand inventory / Standard deviation x √(lead time + 1)

Solving gives:

= 5,050 / 800 x √(11 + 1)

= 5,050 / 2,771.28

= 1.82

With a Z score of 1.82, the probability according to the Z tables will be 96.56%

Find out more on Z scores at https://brainly.com/question/25638875.

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