1. The B&S Novelty and Craft Shop in Bennington, Vermont, sells a variety of quality, handmade items to tourists. It will sell 800 hand-carved miniature replicas of a colonial soldier each year, but the demand pattern during the year is uncertain. The replicas sell for $30 each, and B&S uses a 10-percent annual inventory-holding cost rate. Ordering costs are $8 per order, and demand during the lead time follows a normal distribution, with a mean of 10 and a standard deviation of four.

What is the recommended order quantity? Round your answer to the nearest whole number.

EOQ:_____units ?

If B&S is willing to accept a stockout roughly twice a year, what reorder point would you recommend? What is the probability that B&S will have a stockout in any one order cycle? UseAppendix Ato determinez-value. Roundz-value to two decimal places. Do not round intermediate calculations. Round your answer for the reorder point to the nearest whole number and for the probability of a stockout to four decimal places.

Reoder point:_____units ?

Probability of a stockout:______ ?

What is the safety stock level and annual safety stock costs for this product? Do not round intermediate calculations. Round your answer for the safety stock level to the nearest whole number and for the safety stock costs to the nearest dollar.

Safety stock level:_____units ?

Safety stock costs:$______ ?

2. Crew Soccer Shoes Company is considering a change of their current inventory-control system for soccer shoes. The information regarding the shoes is given below:

Demand = 130 pairs/week

Lead time = three weeks

Order cost = $45/order

Holding cost = $2.00/pair/year

Cycle service level = 96 percent

Standard deviation of weekly demand = 65

Number of weeks per year = 52

The company decides to use a fixed-order quantity system. What would be the reorder point and the economic order quantity? Round your answers to the nearest whole number.

Economic order quantity:_____units ?

Reorder point:_______units ?

In this system, at the beginning of the current week, the materials manager, Luke Thomas, checked the inventory level of shoes and found 500 pairs. There were no scheduled receipts and no back orders. Should he place an order? Explain your answer.

Since the inventory level of 500 pairs IS

Lower than the reorder point, Emily

shouldplace an order.

If the company changes to a fixed-period system and reviews the inventory every two weeks (T= 2), how much safety stock is required? Round your answer to the nearest whole number.

______units ?