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# Acme Copier Supplies currently supplies copier paper from two warehouses.

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 8000 cases per week. The two warehouses are resupplied only once per week.

(a) What is the probability that next week demand at warehouse A exceeds 32,500 cases? (b) What is the stock level required at warehouse A that will meet weekly demand 95% of the time? (c) What is the stock level required at warehouse B that will meet weekly demand 95% of the time? (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? (e) How does your answer to part d change if the correlation between demands at the two warehouses is +0.6875?

a.  0.3085 b.  38225 c.... View the full answer

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