Question: Problem 3. (chapter 9: Inventory Policy Decisions) Suppose that an auto part in a manufacturer's inventory has the following characteristics: Forecast of demand = 1,250

Problem 3. (chapter 9: Inventory Policy Decisions) Suppose that an auto part in a manufacturer's inventory has the following characteristics: Forecast of demand = 1,250 cases per week Forecast error, std. dev. =475 cases per week Lead time = 2.5 weeks Carrying cost =30 % per year Purchase price, delivered = $56 per case Replenishment order cost =$40 per order Stockout cost =$10 per case Probability of being in stock during the lead time =80%

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