You are the inventory manager for a large medical supplies distributer near the medical center.
One of your critical inventory items is an arterial clamp used in emergency surgery. Daily demand for clamps is normally distributed with a mean of 680 and a standard deviation of 300. Your lead time is 4 days, and you order replenishments daily.
A. What is your optimal order-up-to level assuming you want to target a 99% fill rate?
B. Suppose you do an analysis and determine that for each clamp order that can't be filled you lose $20 profit, but for each clamp that you have extra in inventory you lose $50. What is your optimal order-up-to-level?