Problem:
Best Buy continuously reviews its DVD?player inventory levels. For one particular high selling item, it currently buys 250 on each order. Demand is 5200 per year (100 per week) with a standard deviation of 30 per week. The supplier has a 2?week lead time. The ordering cost is $60 and the holding cost is $10/player/year. You can assume that Best Buy owns the disks when they are delivered and the desired service level is 98%.
Required:
Question 1) Calculate the necessary parameter(s) for Best Buy's inventory policy of this high selling DVD? player.
Question 2) What is the safety stock level with this inventory policy?
Question 3) What is the expected shortages per year with this policy?
Question 4) What is the target fill rate with this policy? Solve the given numerical problem and illustrate step by step calculation.