A hospital manager knows the surgical glove has a Normaldistribution with a mean of five boxes of surgical gloves per dayand a standard deviation of one-half box of surgical gloves perday. Two days are required to fill an order surgical glove andordering cost is $10 per order, annual holding cost is $10 per box.The hospital reorders when the surgical gloves on hand and on orderis 12 boxes.
1. Calculate the risk of a stock-out during a lead time.
2. What shortage risk doesthe hospital incur if it orders 36 boxes when the amount on handis 12 boxes If a fixed interval of seven days is used forreordering?
