Problem 3: Your firm uses a continuous review system and operates 52 weeks per year. One of the items has the following characteristics:

Demand () = 20,000 units/year

Ordering cost () = $40/order

Holding cost () = $2/unit/year

Lead time () = 2 weeks

Cycle-service level = 95%

On-hand inventory = 1,040 units

Demand Is normally distributed, with a standard deviation of weekly demand of 100 units.

: Suppose that your firm uses a periodic review system, but otherwise the data are the same as in

Problem 3 above.

1. Calculate the that gives approximately the same number of orders per year as the EOQ. Round your answer to the nearest week.
2. Find the safety stock and the target inventory level that provide a 95 percent cycle-service level.
3. How much larger is the safety stock that with a Q system