Problem 1: (60 points)

A golf specialty wholesaler operates 50 weeks per year. Management is trying to determine an inventory control policy for its 1-irons, which have the following characteristics:

Mean demand = 2000 units/year

Demand is normally distributed

Standard deviation of weekly demand = 20 units

Order cost = $72/order

Annual holding cost = $5/unit

Desired cycle-service level = 90%

Lead time = 4 weeks

Current on-hand inventory is 300 units, with no open orders and a backorder of 30 units.

Currently, the company uses a continuous review (s, S) policy.

1. What is the EOQ? (15 points)

2. What should be the safety stock? What should the reorder point be? (15 points)

3. An inventory withdrawal of 20 units was just made. Is it time to reorder? (10 points)

4. Please describe briefly the inventory control policy based on your calculation including the order quantity, when to order and how often to order. (20 points)