Consider a basic economic order quantity (EOQ) model with the following characteristics: Item cost: $15 Item selling price: $20 Monthly demand: 500 units (constant) Annual holding cost: 9% of purchase cost Cost per order: $18 Order lead time: 5 working days Firm's work year: 300 days (50 weeks @ 6 days per week) Safety stock: 15% of monthly demand I need help with the last four questions:

7 What is the average lead time demand? a) 100 units b) 16 units c) 8 units d) 75 units e) none of the above

8 If the standard deviation of the lead time demand is 10 units, what is the cycle service level with the given safety a) 100% b) 95% c) 99% d) 75% e) none of the above

9 If the standard deviation of the lead time demand is 10 units, what would be the safety stock if cycle service level is 99%? a) 75 b) 175 c) 123 d) 100 e) none of the above

10 Assuming cycle service level of over 99% is not advisable, what is the annual cost of carrying un-necessary safety stock? a) $ 70.20 b) $ 1,350.00 c) $ 414.00 d) $ 1,800.00 e) none of the above