1. A given product has an expected demand of 240 units per month, with a standard deviation of 70 units per month. Lead time is 0.5 months. The customer service level (CSL) has been set so that we have a value of k=1.28. We want to manage this product's inventory using a (R, S) periodic review policy. We plan to order every 2 months (R = 2 months). Using the k value from above, what is the order up to level, S, for this policy? 
2. 
   
3. Give your answer rounded to the closest integer. Since orders are placed every 2 months, and the demand is variable, the order quantities are not identical. But we can estimate an average order size. What is the expected average order size for the policy described above? Under this policy, how many orders are placed per year? Placing each order costs $100. What is the annual ordering cost?

Answer rating: 100% (QA)

The order up to level S for the R S periodic review policy is calculated as follows S d k l where d ... View the full answer