Fliboard is a startup company that develops self-balancing scooters (hoverboards) and sells online

52 weeks a year

Fliboard currently sells two products, Proboard (P1) and Babyboard (P2)

Weekly demand (independent) Proboard (P1) : 30 units per week with standard deviation of 15 units per week

Babyboard (P2): 20 units per week with standard deviation of 10 units per week

Price Proboard : $400 Babyboard: $300

Costs of battery Proboard : $150 Samsung 42V Li-ion battery (B1) Babyboard: $100 HoverFixer 36V Li-ion battery (B2)

Cost of material other than battery Proboard : $150 Babyboard: $100

Fliboard uses continuous review policy Lot size is calculated using economic order quantity (EOQ) Batteries are supplied independently from each supplier

Cycle service level (CSL) Samsung battery : 0.99 HoverFixer battery: 0.99

Replenishment lead time Samsung battery : 4 weeks HoverFixer battery: 4 weeks

Fixed order cost Samsung battery : $1,000 per order HoverFixer battery: $1,000 per order

Inventory holding cost of battery Samsung battery : $60 HoverFixer battery: $40

Calculate following values for replenishing battery

(1-1) Lot size (Q) For Samsung battery For HoverFixer battery

(1-2) Safety inventory (ss) For Samsung battery For HoverFixer battery

(1-3) Annual ordering cost (AOC) For Samsung battery For HoverFixer battery

(1-4) Annual holding cost (AHC) For Samsung battery For HoverFixer battery

(1-5) Annual material cost including battery (AMC) For Proboard For Babyboard

Calculate total profit of the current operation (two hoverboards)

(1-6) Total profit Profit = Revenue Total Cost

Where total cost is sum of:

Annual material cost

Annual ordering cost

Annual holding cost