The Hastings Company is a nation-wide wholesaler for small electronic devices. One of its most popular items is a new GPS unit called the WAMI-1000. Hastings has gathered the following information, and has asked you to develop a continuous review inventory control system for this item: Order quantity for each order placed with manufacturer = 50,000 units Average demand = 5,000 units/week Standard deviation of weekly demand = 1,000 units Average lead time = 4 weeks Standard deviation of lead time: 1 week Cycle-service level = 90% (z for 90% = 1.28)

a. What is the standard deviation of demand during lead time?

b. What is the safety stock level that should be carried for the WAMI-1000?

c. What is the reorder point for the WAN-1000?

d. Summarize the actions Hastings should take using your new inventory system.

e. If Hastings decides to increase its cycle-service level to from 90% to 99% (z for 99% = 2.33), how does this change the actions that should be taken