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A specialized watch shop in Zurich Airport sells on average 30 units per week (or 30x52=1560 per year) with a standard deviation of 20 units

A specialized watch shop in Zurich Airport sells on average 30 units per week (or 30x52=1560 per year) with a standard deviation of 20 units per week. The cost price of a watch is SFr. 4000, and the yearly holding cost is 25% of the cost price. Replenishment from the distribution center to the shop costs 10 SFr. per delivery and takes 2 weeks. The shop owner maintains a service level of 90%.

The shop currently holds 3 weeks of inventory. In a quest to free up cash, the shop owner wants to optimize inventories.

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