The lead time for a replenishment item at a local grocery store is 3 weeks. Management would like to tolerate only one stockout each year. The ordering cost is $110, the holding cost is $4.50/unit/year. The weekly demand is normally distributed with a mean of 100 and a standard deviation (sigma) of 12. Assume the company operates 50 weeks a year. Determine:

The economic order quantity. (3 pts)

The service level (2 pts)

The safety stock for the desired customer service level. (2 pts)

The reorder point. (2 pts)

The average inventory. (2 pts)

Suppose the lead time changes to 2 weeks, what will be the new safety stock? (2 pts)

Service Level (%)	Safety Factor
85	1.04
86	1.08
87	1.13
88	1.18
89	1.23
90	1.28
91	1.34
92	1.40
93	1.48
94	1.56
95	1.65
96	1.75
97	1.88
98	2.05
99	2.33
99.99	4.00

Answer rating: 100% (QA)

EOQ Q 2Ah 211010045 476 units Service le... View the full answer