How much safety stock does goodstone currently carry

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The manager at Goodstone Tires, a distributor of tires in Illinois, uses a continuous review policy to manage their inventory. The manager currently orders 10,000 tires when the inventory of tires drops to 6,000. Weekly demand for tires is normally distributed with a mean of 2,000 and a standard deviation of 500. The replenishment lead time for tires is two weeks. Each tire costs Goodstone $40 and the company sells each tire for $80. Goodstone incurs a holding cost of 25 percent of the purchasing cost

a. How much safety stock does Goodstone currently carry?

b. At what target service level is the manager's current inventory policy justified?

c. How much safety stock should Goodstone carry if the target service level is 0.988?

Reference no: EM132817457

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