Best Byte, a major online consumer electronics retailer with a central depot in Surrey, BC, purchases a steady-selling video-casting device called Chromescreen from the manufacturer at $40/unit. The weekly demand for Chromescreen is steady at 60 units. The fixed ordering cost for Chromescreen is $100 per order and the annual holding cost rate is 25% of the unit purchasing cost. Assume 52 weeks/year. For parts C,D,E refer to the following Due to frequent technological developments in the industry, the demand for Chromescreen is no longer deemed steady. Weekly demand for Chromescreen exhibits variability with an average demand of 60 units/week and a standard deviation of 12 units/week. Best Byte wants to target a 94% service level for Chromescreen. The shipment from the manufacturer arrives exactly one week after the order placement.

C. How much safety stock of Chromescreen should be held at the central depot?

Safety stock:

3

D. When should Best Byte place an order for Chromescreen? (i.e., what is the reorder point?)

ROP:

3

E. If the ordering system is set up in such a way that an order is placed for Chromescreen whenever the inventory level reaches 70 units, what would be the implied service level for Chromescreen?

Implied service level: