As an intern at Abilene Cracker Distribution Company $($ACDC$),$ you have been asked to

analyze the inventory policies for the company$$s single$-$serve two$-$cracker packages distributed

across Texas, New Mexico and Oklahoma.

Your manager provided you the following worksheet to complete:

$($Your manager provided helpful equations at the bottom of the worksheet $($show your work$))$

For all questions show your work.

Part A: EOQ, TAC,...

$$ Average demand: $75,000$ cases of crackers per year

$($demand and lead time uncertainty will be addressed in part B$)$:

$$ Cracker cost: $$5\mathrm{.}50$ per case

$$ Each order delivery cost: $$250$

$$ Carrying cost: $26\%($Money spent on crackers has an alternative investment with annual interest of $26\%)$

$2$b$)$ Round down your EOQ solution to the whole case and calculate TAC $($$$).$

$4)$ What do you expect the average number of days between single$-$serve cracker package cases will be$?($no need to round$)$

Part B: Safety Stock, etc...

Nothing at ACDC ever quite operates on time and customers can be finicky about when and how

much they order; however, over the years a rhythm has been tracked that when aggregated

among all customers follows a $$predictably$$ random normal distribution.

$$ Average demand: $75,000$ cases of crackers per year $($from part A$)$

$$ Standard deviation of demand: $15,000$ cases of crackers per year

$$ Average lead time: $6$ days

$$ Standard deviation of lead time: $3$ days

$$ Service level: $97\mathrm{.}5\%($ACDC believes in high levels of service and quality$)$

$6)$ What is the average inventory for the single$-$serve cracker package cases?