Question: Under the ordering policy currently in use , what is the service level ? What is the reorder point R and associated safety stock level

Under the ordering policy currently in use , what

Under the ordering policy currently in use, what is the service level?

What is the reorder point R and associated safety stock level if we want to establish a 99% service level for this item?

If we were going to use a periodic review (P, T) system for this item, what target inventory level T would be used to establish a 99% service level? What is the safety stock?

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Inventory System Problem Parameters Daily demand for an an inventory item is normally distributed with average value of 36 units per day The standard deviation of daily demand is 6 The item is used 365 days per year We buy the item for $70 per unit Each time we order, we incur fixed ordering costs of $100 per order Our annual carrying cost rate is 25% When we order replenishment inventory, the order lead time is 3 days The ordering policy currently being used is: Whenever inventory position falls to R = 130 units, an order is placed for Q = 580 units

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