1. GamePop is a retailer of video game stuff in university campuses. At one of their...

    

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1. GamePop is a retailer of video game stuff in university campuses. At one of their campuses, GamePop is trying to decide the inventory policy for game cartridges. The unit cost per cartridge is $10, but because of the risk of obsolescence, the annual holding cost is accounted at 30%. Annual demand is estimated to be approximately normal with mean 10,000 and standard deviation 2,700. Unmet demand is lost directly. GamePop orders these cartridges from a distributor, and incurs a fixed cost of $400 per order for transportation as well as a total lead time of 15 days. Assume a year has 365 days. For Question a to c, assume GamePop operates a continuous review inventory policy at a service level of 90%. What are the parameters of the optimal continuous review inventory policy? Assume the order quantity is calculated using EOQ equation. b. What is the estimated total annual cost incurred by GamePop? c. GamePop is considering a proposal to switch to an alternative transportation provider, who can deliver at a lead time of mean 10 days with standard deviation 2 days. However, this would increase the fixed cost per order. What is the maximum fixed cost for which GamePop will find it profitable to switch to the new transportation provider? Assume all the other parameters does not change. Answer to the nearest dollar; using trial-and-error is fine. For Question d, assume GamePop operates a periodic review inventory policy at a service level of 90%. d. Assume GamePop reviews his inventory every 3 weeks (21 days). What is the estimated total annual cost incurred by GamePop? Assume the lead time is still 15 days. 1. GamePop is a retailer of video game stuff in university campuses. At one of their campuses, GamePop is trying to decide the inventory policy for game cartridges. The unit cost per cartridge is $10, but because of the risk of obsolescence, the annual holding cost is accounted at 30%. Annual demand is estimated to be approximately normal with mean 10,000 and standard deviation 2,700. Unmet demand is lost directly. GamePop orders these cartridges from a distributor, and incurs a fixed cost of $400 per order for transportation as well as a total lead time of 15 days. Assume a year has 365 days. For Question a to c, assume GamePop operates a continuous review inventory policy at a service level of 90%. What are the parameters of the optimal continuous review inventory policy? Assume the order quantity is calculated using EOQ equation. b. What is the estimated total annual cost incurred by GamePop? c. GamePop is considering a proposal to switch to an alternative transportation provider, who can deliver at a lead time of mean 10 days with standard deviation 2 days. However, this would increase the fixed cost per order. What is the maximum fixed cost for which GamePop will find it profitable to switch to the new transportation provider? Assume all the other parameters does not change. Answer to the nearest dollar; using trial-and-error is fine. For Question d, assume GamePop operates a periodic review inventory policy at a service level of 90%. d. Assume GamePop reviews his inventory every 3 weeks (21 days). What is the estimated total annual cost incurred by GamePop? Assume the lead time is still 15 days.