H&C is conducting inventory planning for a specific electronic component A:

Demand = 100 units/week, standard deviation of demand = 50 units

Delivery lead time = 2 weeks, standard deviation of lead time = 0

Annual holding cost per unit = 20% of unit cost

Ordering cost = $10.00/order

Unit Cost = $8.00 per unit

Desired cycle service level = 97.5% (Z=1.96)

Assume 52 weeks per year.

What is the economic order quantity (EOQ)? What is the required safety stock? Component A is currently ordered in quantities of 100. How much would H&C save in total annual costs (order+carrying) by changing to the EOQ? What is the difference in safety stock quantities (Z*) if component A is managed using a periodic review model versus a continuous review model? (assuming order interval (OI) = 3 weeks) What is the required safety stock if the standard deviation of lead time (LaTeX: \sigma_t t) equals 1? Hint: LaTeX: \sigma_{ddlt}=\sqrt{\overline{t}\sigma^2_d+\overline{d}^2\sigma^2_t}