What is the average demand during lead time

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Reference no: EM132241619

CheapBuy is an electronics retail chain selling Gateway netbooks. The demand for the Gateway netbook LT20 at their local store is normally distributed with a mean of 38 netbooks/week and standard deviation of 6 netbooks/week. CheapBuy orders netbooks from Gateway at unit cost of $220. The annual cost of carrying inventory at the store is 5% of the purchase cost per unit per year. It takes 2 weeks to receive a delivery. Each time CheapBuy places an order it incurs a fixed cost of $100. The store continuously reviews its inventory and orders when inventory falls below its reorder point. (Do NOT round numbers, especially inventory, to integer. Round numbers to 2nd decimal place.)

a. Compute the safety stock (number of netbooks) needed to maintain a service level of 95%.

b. What is the average demand during lead time?

c. What is the reorder point?

d. What is the optimal order quantity (Assuming 52 weeks a year)? How much additional safety stock would be needed if CheapBuy wishes to increase the service level at their local store from 95% to 98%?

Reference no: EM132241619

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