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Weekly demand for Motorola cell phones at a Best Buy store is normally distributed, with a mean of 300 and a standard deviation of 200. Motorola takes 2 weeks to supply a Best Buy order.
A) Best Buy is targeting a service level of 95% and monitors its inventory continuously. How much safety inventory of cell phones should Best Buy carry? What should its reorder point be?
B) Suppose the store manager decides to follow a periodic review policy to manage inventory of cell phones. She plans to order every 3 weeks. Given a desired service level of 95 percent, what should the base-stock level be?
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