Question $2(10$ points$)$: Quantity discounts. Hops R Us offers a quantity discount for their

purchases. The below table contains the discount information.

A$)(5$ points$)$ What is the most optimal inventory management approach for Hops

$($considering cost only$)$

B$)(5$ points$)$ INDIVIDUAL EFFORT. How did you determine that is the optimal

approach.

Question $3(35$ points$)$: Statistical reorder point and safety stock. Ray is concerned about

uncertainty and variability related to beer sales. He wants to ensure that there is adequate

beer on hand to meet demand; and therefore, adequate raw materials on hand to support

brewing cycles. Specifically, for hops:

Average demand during lead time $=8lbs.$ The SD for demand during lead time $=2lbs.$

Ray wants to ensure that he has adequate hops to support brewing cycles $80\%$ of the time,

considering the variability above. $($For full credit, please show your calculations for the

below.$)$

A$)(5$ points$)$ What would the required safety stock be for hops given the above

information?

B$)(5$ points$)$ What is the reorder point for hops?

C$)(5$ points$)$ Ray decides that he wants a $95\%$ service level for hops availability.

What is the revised safety stock to support that?

D$)(5$ points$)$ What is the revised order point?$|$

E$)(15$ points$)$ INDIVIDUAL EFFORT. Ray is curious what the impact would be if he

wanted $99\mathrm{.}5\%$ service level. Discuss how you would calculate that. What would

the resulting safety stock and ROP be from that, and what advice can you give

Ray about that service level and its associated costs? PLEASE INCLUDE EXCEL FUNCTION FOR APPLICABLE CALCULATIONS