Question: A company sells a product whose demand is normally distributed with a mean of 120 units/week and a standard deviation of 20 units/week. It currently

A company sells a product whose demand is normally distributed with a mean of 120 units/week and a standard deviation of 20 units/week. It currently purchases the item from its supplier when the inventory level falls to 400. Supply lead time is 3 weeks.

How much safety stock is currently being held?

What Cycle Service Level is currently being supported?

If a 91 percent Cycle Service Level is desired, what reorder point should be used?

If the annual holding cost is 20 percent of item cost and the item costs $12/unit, what will be the cost of safety stock inventory based on a 91 percent Cycle Service Level?

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