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The demand for an item during the re-order period is normally distributed with mean = 500 units and standard deviation = 40 units.
Given data: Area between mean line and Z line corresponding to Z is given in table:

If the reserve stock is 66 units then the probability of stock-out of the units in the firm is
  • a)
    0.05
  • b)
    0.5
  • c)
    0.95
  • d)
    0.45
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
The demand for an item during the re-order period is normally distribu...
Given, μ = 500 units, σ = 40 units, RS = 66 units, X =500+40 =540 units
The normal distribution curve is shown in figure.

Probability of stock out = 1−Service level

So the area between mean line μ and Z line = 0.45
So, service level = 0.5 + 0.45 = 0.95
Probability of out of stock = 1−0.95 = 0.05
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The demand for an item during the re-order period is normally distributed with mean = 500 units and standard deviation = 40 units.Given data: Area between mean line and Z line corresponding to Z is given in table:If the reserve stock is 66 units then the probability of stock-out of the units in the firm isa)0.05b)0.5c)0.95d)0.45Correct answer is option 'A'. Can you explain this answer?
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The demand for an item during the re-order period is normally distributed with mean = 500 units and standard deviation = 40 units.Given data: Area between mean line and Z line corresponding to Z is given in table:If the reserve stock is 66 units then the probability of stock-out of the units in the firm isa)0.05b)0.5c)0.95d)0.45Correct answer is option 'A'. Can you explain this answer? for GATE 2024 is part of GATE preparation. The Question and answers have been prepared according to the GATE exam syllabus. Information about The demand for an item during the re-order period is normally distributed with mean = 500 units and standard deviation = 40 units.Given data: Area between mean line and Z line corresponding to Z is given in table:If the reserve stock is 66 units then the probability of stock-out of the units in the firm isa)0.05b)0.5c)0.95d)0.45Correct answer is option 'A'. Can you explain this answer? covers all topics & solutions for GATE 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The demand for an item during the re-order period is normally distributed with mean = 500 units and standard deviation = 40 units.Given data: Area between mean line and Z line corresponding to Z is given in table:If the reserve stock is 66 units then the probability of stock-out of the units in the firm isa)0.05b)0.5c)0.95d)0.45Correct answer is option 'A'. Can you explain this answer?.
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