periodic review systems with variable lead time and constant demand.

The value:

annual demand D: 16200

Reorder Cost(RC): 42.93

Stockout: 0.5 per year

Unit cost: 42

HC: 19%

Average lead time: 7 / lead times in days for the past 70 cycles

The standard deviation of lead time: 1.12

Z value is (Z): 1.73

Replenishing its inventory of compressors once a month (T)

and operates 280 days per year

Q: Introduction of a new product has resulted in reducing the storage capacity for the compressors to an average of 100 units. How should the companys inventory policy be reviewed to cope with this new restriction? What would be the impact of the revised policy on the costs? Explain.