Table 1

SKU	Mean demand (units/month)	Std. Deviation (units/month)	Unit cost ($/unit)	Unit Sale Price ($/unit)
A	15000	2000	$16	$20
B	10000	3000	$20	$23
C	10000	1500	$14	$16

For the data provided in Table 1, suppose the holding cost per unit per month is 3% of the cost of the item, and the backorder cost is 20% of the profit margin per month. The lead time to replenish the toys from the manufacturer in South Eastern China is two months.

Without substitution, the optimal replenishment order quantity for A in units will be closest to:

	5500
	6000
	6500
	7000
	7500

The safety stock for C will be closest to:

	130
	65
	0
	-65
	-130

With these 3 target service levels, for a customer who is willing to substitute easily among the 3 items (i.e. if they cannot find A, they will buy Bumblebee if available, and so on), the overall probability of a stock-out is closest to:

	10%
	30%
	50%
	70%
	90%

For the same service level requirement and replenishment lead time, you will find the safety stock is the greatest for

	A
	B
	C
	Each of them will have the same safety stock
	Cannot say with the information provided

Without substitution, the optimal replenishment order quantity for C in units will be closest to:

	3500
	4000
	4500
	5000
	5500

The safety stock for A in units will be closest to:

	500
	600
	700
	800
	900

The target service level for B should be closest to:

	30%
	40%
	50%
	80%
	100%

The safety stock for B in units will be closest to:

	150
	75
	0
	-75
	-150