Question: Scenario 9 . 7 Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular model

Scenario 9.7
Cranium, Inc., purchases term papers from an overseas supplier under a continuous review system. The average demand for a popular model is 300 units a day with a standard deviation of 30 units a day. It costs $60 to process each order and there is a five-day lead-time. The holding cost for a paper is $0.25 per year and the company policy is to maintain a 98% service level. Cranium operates 200 days per year.
How much safety stock is needed to satisfy a 98% cycle-service level?

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