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WL Electronics sells odometers to two major auto manufacturers in Alabama. The company buys sub component from China and it takes 6 weeks to deliver products from China to AL. The logistics team is trying to minimize the total cost of ordering and inventory by deciding between continuous and periodic review inventory policies. The yearly demand for odometers is 150000 units with a standard deviation of 250 units per week. Inventory holding rate is 30% per odometer per year. Each odometer costs $480 and fixed cost of ordering odometers from China is $2500. It WL Electronics targets 99% CSL for its customers. Given this information a. Calculate the total cost of continuous review policy b. Calculate the total cost of base-stock periodic review policy c. Should WL choose continuous or periodic inventory policy? d. Is the decision on part c always true? In another word, would WL make a different decision on part c if demand, standard deviation or any other parameter is different?
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