Question: Air Electroncis uses a continuous review system (Qsystem). The newly offered headphones have the following characteristics: Demand = 10 units/week (assume 52 weeks per year)

Air Electroncis uses a continuous review system (Qsystem). The newly offered headphones have the following characteristics:

Demand = 10 units/week (assume 52 weeks per year)

Ordering or setup cost (S) = $45/order

Holding cost (H) = $12/unit/year

Lead time (L) = 3 weeks (constant)

Standard deviation in weekly demand = 8 units

Target service level = 70%

(a)What is the EOQ for this item?

(b)What is the desired safety stock?

(c)What is the desired reorder point R?

(d)Currently, there are 18 headphones in stock, and there are 7 units already in transit to be received soon. If there are no backorders, should theyorder? If so, how many headphones?

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