Question $33$

$H$&$C$ is conducting inventory planning for a specific electronic component $A$ :

Demand $=100$ units$/$week$,$ standard deviation of demand $=40$ units

Delivery lead time $=2$ weeks, standard deviation of lead time $=0$

Annual holding cost per unit $=20\%$ of unit cost

Ordering cost $=$$$\frac{10\mathrm{.}00}{?}$ order

Unit Cost $=$$$8\mathrm{.}00$ per unit

Desired cycle service level $=95\%(Z=1\mathrm{.}65)$

Assume $52$ weeks per year.

What is the economic order quantity $($EOQ$)?$

What is the required safety stock?

Component $A$ is currently ordered in quantities of $100.$ What are the current total annual ordering and carrying costs?

How much would H&C save in total order$+$carrying costs by changing to the EOQ?

What is the difference in safety stock quantities if component $A$ is managed using a periodic review model versus a continuous review model?

$($assuming order interval $($OI$)=3$ weeks$)$

What is the required safety stock if the standard deviation of lead time $({}_t)$ equals $1?$

Hint: ${}_{ddlt}=\sqrt[\phantom{2}]{\frac{?}{\text{b}\text{a}\text{r}}(t){}_d^2\frac{+}{b}ar(d{)}^2{}_t^2}$