Bill Nye is responsible for managing the inventory for a professional microscope at WonderKid science supply store. An order arrives 6 days after it is placed and orders may be placed every 15 days. Weekly demand for microscopes follows a normal distribution with a mean of 70 units per week and a standard deviation of 20 units. The annual holding cost of the microscope is 40% of the procurement cost per unit which is $800. WonderKid requires a 97% service level for microscopes and uses a base stock policy for its microscope inventory. Assume that there are 7 working days in a week, 52 weeks in a year, and 364 working days in a year. Enter all computations rounded to two decimal places.

Compute the order-up-to level and safety stock for microscopes.

a) Order-Up-To Level = Answer _____ units.

b) Safety Stock = Answer _____ units.

c) At the end of a given review period, WonderKid has 40 units in stock and 150 on order. How many units should WonderKid order based on your target inventory position? Round up to the nearest unit if necessary. Order ____ units.

d) At the end of a later review period, WonderKid has 50 units in stock and 250 on order. How many units should WonderKid order based on your target inventory position? Round up to the nearest unit if necessary. Order _____units.

How much would WonderKid save in annual holding cost on safety stock if it moved to a continuous review system?

e) Reorder Point = _____ units.

f) Holding Cost at original lead time under periodic review system = $_____

g) Holding Cost at new lead time under continuous review system = $_____

h) Savings in annual holding cost = $_____