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The annual demand for a product is 15,600 units. The weekly demand is 300 units with a standard deviation of 90 units. The cost to place an order is $31.20, and the time from ordering to receipt is four weeks. The annual inventory carrying cost is $0.10 per unit.
A) How much to order: Find the optimum ordering quantity.
B) When to order: Find the reorder point necessary to provide a 98% service level.
C) Suppose the production manager is asked to reduce the safety stock of this item by 50%. If she does so, what will the service level be?
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