Question: The Shae Tool Company estimates that the average demand for a certain component is 25,000 units per year with a constant rate and is satisfied

The Shae Tool Company estimates that the average
The Shae Tool Company estimates that the average demand for a certain component is 25,000 units per year with a constant rate and is satisfied by outside purchase. The standard deviation of weekly demand is 60 units per week. The cost of placing an order is $1,000.00 per order, and the cost of each unit is $20.00. The lead time between an order and receipt of the shipment is four (4) weeks. Shortages are not allowed, and inventory cost is 10 percent of item cost per year. Assume that a year has 50 weeks of work. a. Assuming no uncertainty, when should an order be placed and for how much in order to minimize inventory related costs? b. If the company uses the perpetual inventory (fixed quantity) policy with a service level of 90 percent, what will be safety stock and reorder level? c. Now suppose that in part (b) above, the service level is desired to be 97 percent, how will the safety stock and reorder level change? d. If the company uses the periodic review (fixed period) system with a review period of 12 weeks and a service level of 90 percent, what will be the safety stock and target inventory level? e. Now suppose that in part (d) above, the service level is desired to be 97 percent, how will the safety stock and reorder level change? f. Now suppose that in part (d) above, the review period changes to 21 weeks and the service level is desired to be 97 percent, how will the safety stock and reorder level change

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