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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
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 120 netbooks/week and standard deviation of 10 netbooks/week. CheapBuy orders netbooks from Gateway at unit cost of $180. The annual cost of carrying inventory at the store is 20% of the purchase cost per unit per year. It takes 2 weeks to receive a delivery. The store reviews and places an order at the start of each week. Given that the store uses the above periodic review inventory policy, which of the following statement is FALSE? [Note: Safety stock is rounded up to the nearest whole number. Regarding z values, please find them in lecture slides.] The lead time and review cycle are in total 3 weeks. If the firm wishes to increase its service level, safety stock will increase as well. The holding cost of safety stock is $5220. The z value associated with the 95% service level is 1.64 . Safety stock is 29 netbooks
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