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Question - Steren sells sound equipment and uses a continuous review system. The weekly historical demand for a smart speaker indicates that it has a normal distribution with mean of 280 and standard deviation of 50. It takes about three weeks for an order to arrive after an order is placed. The store pays $ 15 for a unit and it costs $ 300 to place the order. Steren places a high value on customer satisfaction and considers goodwill crucial as they estimate that customer loss costs $ 1 / speaker and carries a late delivery penalty of $ 1.2 / speaker-week. Stocks can be backordered and the annual cost of holding inventory is 25%. 98% fill rate required
a) Find the reorder point ROP. Consider Q = 960 units.
b) Find the safety inventory for the speakers.
c) Find the expected annual cost of the continuous review policy.
d) Find the expected number of missing speakers per year e) Find the cost for shortages per year.
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