Q $2($a$)$

$[10$ Marks$]$

For a certain item, a company:

maintains a buffer stock of $100$ units,

expects a constant demand rate of $125$ units per week,

orders $500$ units every time an order is placed, and

knows that the order lead time $($time from re$-$order to delivery$)$ is two weeks.

Determine the expected stock on hand when an order is placed, the time

between orders and the maximum stock level.

$(4$ Marks$)$

Provide a diagram with clear labels that illustrates this cyclic ordering policy,

$($buffer stock, lead time, re$-$order level, order quantity and maximum stock level$)$

$(6$ Marks$)$