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.
a. What is the economic order quantity (EOQ)?
b. What is the optimal cycle service level (CSL)?
c. BVE aim to achieve a CSL of 97.8% [F-1(.978, 0, 1) = 2]. What is BVE’s safety inventory?