Artists’ Advantage sells painting supplies. The most basic brush for watercolors, the T100, sells 2,080 per year. The order cost is $30 per order, and the holding cost is $3.00 per box. The lead time for an order is 3 weeks, and the standard deviation of demand is 6 boxes per week.
a. What is the optimal order quantity of brushes?
b. What is the optimal number of orders per year?
c. Compute the period that most closely matches this EOQ.
d. What value of z should be used if A1 wishes to achieve a cycle-service level of 98 percent?
e. Using the period from part c, compute the target inventory level T. How much safety stock of brushes does this provide? How does this compare to the safety stock if a continuous review system is used?