Safety stock should be added in addition to cycle inventory

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(Best Buy Part B) At a Best Buy store, the forecast for the annual demand of a Motorola cell phone is 15600. Demand forecasts are updated weekly and the unit time is one week. Motorola takes 2 weeks to supply an order and the setup cost is $400 per order. The holding cost rate is 10% and one cell phone costs $50. The store manager now finds that the weekly demand is highly random and normally distributed with a mean of 300 and a standard deviation of 200. Best Buy is targeting a service level of 97.73%. (Best Buy Part B) (a) To cope with demand uncertainty, how much safety stock should be added in addition to the cycle inventory you have found in Part A? [Answer format: integer] (b) What is the on-hand inventory when an order is placed? [Answer format: integer] Write your answer(s) as 123, 4567.

Reference no: EM132223348

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