A golf specialty wholesaler operates 50 weeks per year. Management is trying to figure out an inventory policy for its 1-irons, which have the following characteristics:
• Annual demand = 2000 units per year
• Demand is normally distributed
• Standard deviation of weekly demand = 3 units
• EOQ = 150 units • Lead time = 4 weeks
What is the safety stock and statistical reorder point that leads to a service level of 95% (assume z = 1.64)?
What would be the reorder point for a service level of 99% (assume z = 2.33)?