Problem 3 Digital Plaza is a local electronics store. You are asked to determine the optimal ordering policy for Samsong 40 inch LED TV. The weekly demand for this LED TV is normally distributed with a mean of 60 units and standard deviation of 15 units. The store follows the continuous review EOQ model to manage its inventory. Digital Plaza orders Samsong 40 inch LED TV from the supplier at a unit cost of $240 and the fixed ordering cost of $220. The annual cost of carrying a unit of inventory at the store is equal to 25% of the unit cost. It takes 28 days to receive a delivery. Assume that a year has 52 weeks. (Note: z-values corresponding to standard normal probabilities can be calculated using Excel or can be found in the table provided at the end of the problem) a. How many Samsong 40 inch LED TV's should be included in each order Digital Plaza places for this LED TV? That is, compute the Compute the Economic Order Quantity that Digital Plaza should use (pay attention to units). b. Compute the safety stock (units of TV) needed to maintain a service level of 95%. c. What is the annual holding cost for carrying this safety stock? d. Compute the reorder point for 95% service level. e. How much additional safety stock would be needed if Digital Plaza wishes to increase the service level from 95% to 98%? What is the additional cost associated with this increase in the safety stock? Table of z-values Probability 0.99 0.98 0.97 0.96 0.95 0.94 0.93 0.92 0.91 0.90 z-value 2.326 2.054 1.881 1.751 1.645 1.555 1.476 1.405 1.341 1.282 Probability 0.89 0.88 0.87 0.86 0.85 0.84 0.83 0.82 0.81 0.80 z-value 1.227 1.175 1.126 1.080 1.036 0.994 0.954 0.915 0.878 0.842