Demand for an item is normally distributed

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Demand for an item is Normally distributed with a mean of 400 units per week and a standard deviation of 60 units.

Order cost is $300, holding cost is $12 a unit per year, and lead-time is 2 weeks and constant.

(Round Q and Safety Stock up to the nearest whole number)

a. Describe a (Q, R) Policy that gives a 96% service level and indicate the cost of holding safety stock for this policy.

b. How much would costs increase if the service level were 98%?

c. Suppose that we plan to review the inventory every T weeks, where T is calculated based on the order quantity in a. Now, describe a (S, T) Policy that gives a 96% service level and indicate the cost of holding safety stock for this policy.

Please answer QA, QB, & QC displaying all work.

Reference no: EM132252287

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