Question: AQ 3 . Inventory Management ( 1 0 marks ) A retail store needs to determine the optimal ordering policy for a kind of carbonated

AQ3. Inventory Management (10 marks)
A retail store needs to determine the optimal ordering policy for a kind of carbonated drinks. The lead time is 2 weeks. Weekly demand is normally distributed with a mean of 200 bottles and a standard deviation of 20 bottles.
1.[6 marks] In order to achieve a 95% service level, how many bottles of carbonated drinks should the store keep as the safety stock? And at what inventory level should the store start placing an order?
2.[4 marks] What service level can be achieved if the store always starts placing an order when the number of bottles drops to 424 bottles?

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