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QUESTION

Weekly demand of laptop computers in BVE store is independent and normally distributed with a mean of 1,000 and a standard deviation of 300. There...

Weekly demand of laptop computers in BVE store is independent and normally distributed with a mean of 1,000 and a standard deviation of 300.  There are 52 weeks in a year.  The inventory holding cost is $130 per laptop per year.  The fixed ordering cost is $2,000.  The replenishment lead time is 4 weeks.  If laptops are out of stock, the store offers $100 discount per laptop to keep the customer. 

What is the economic order quantity (EOQ)?

What is the optimal cycle service level (CSL)?

BVE aim to achieve a CSL of 97.8% [F-1(.978, 0, 1) = 2].  What is BVE’s safety inventory?

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