Questions $3$: $[18]$

$3\mathrm{.}1.$ While a shortage of stock has implications explain how a surplus of stock can

also create problems. $(5)$

$3\mathrm{.}2.$ ABC Electronics purchases a component from a supplier for their production

line. Determine their reorder point for this component based on its weekly

usage, lead time, desired buffer stock, and number of orders per year. $(7)$

Data:

Weekly usage $($Demand$)$: $200$ units

Lead time $($Delivery time$)$: $2$ weeks

Buffer stock $($Safety stock$)$: $300$ units

Orders per year: $50$

$3\mathrm{.}3.$ Discuss the causes of insufficient capacity. $(6)$