In Example 5.8, sketch a plot of safety stock versus service level. Use values of 0.01,

In Example 5.8, sketch a plot of safety stock versus service level. Use

α values of 0.01, 0.02, 0.03, 0.05, 0.075, 0.10, 0.125, and 0.150. What can you conclude from the graph?

Example 5.8 A retail outlet orders item A1 from a regional DC. The item costs $100 per unit, the order cost is $1000 per order, and the discount rate used for holding is 25%. In addition, it is desired that the service level is 95%. Annual demand for the item is normally distributed with a mean of 4000 and standard deviation of 1200. Replenishment lead time is 1 week. The outlet wishes to develop the (Q, R) model using the EOQ.