Response to the following problem:
Click Pix, a large discount camera shop in New York City is open six days a week, 52 weeks a year. The store has recently begun carrying 5onic model P$58 camcorders which cost $520.00 each and retail for $649.99. $ales average 60 units per week. The cost of placing an order with Sonic is $90, and the lead time is seven working days. The store estimates that the lead time demand follows a normal distribution with a mean of 70 units and a standard deviation of 15 units. Click Pix uses an annual holding cost rate of 18% for the camcorders. Ideally, it would like to run out of the camcorders during at most one inventory cycle per year.
Given this goal, determine the following:
a. The optimal inventory policy (order quantity and reorder point) for Sonic camcorders.
b. The number of working days between orders (cycle time).
c. The total annual inventory cost (holding, ordering, procurement, and safety stock) for this policy and the projected annual profit for this policy.