Question: 6-4 Given this information: Average weekly demand = 100 units. Standard deviation = 10 units. Lead time = 6 weeks. Acceptable stockout risk = 2.5%

6-4 Given this information:
Average weekly demand = 100 units.
Standard deviation = 10 units.
Lead time = 6 weeks.
Acceptable stockout risk = 2.5%
Ordering cost = $30
Annual Holding cost = 20%
Unit cost (purchase price) = $20
The company operates = 50 weeks a year.
Weekly usage rates are distributed normally.
Determine each of the following, assuming that lead time demand is distributed normally:
a. Order quantity (EOQ).
b. The safety stock needed to attain a 2.5 percent risk of stockout during lead time.
c. The reorder point (ROP) that will provide a risk of stockout of 2.5 percent during lead time.

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