Example 1: Inventory Management P= $150/order: C = $25/unit/yr; D = 6,000/yr Inventory Management Decisions: 1. How many units should be ordered at a time? 2. When should we send in the order? Assume the firm works 355 days/yr and it takes 4 working days to receive an order. 3. How much (if any) safety stock should we have? Stockout costs are $20/unit stocked out and lead time is 4 work days 80% of the times when we order, but is 5 work days 15% of the times when we order, and is 6 work days 5% of the times when we order. Example 1A: Now, instead, assume that lead time of 4 work days is certain. However, during lead time the total usage is: 68 units during the 4 days lead time - this happens 90% of the time when units are ordered, or 100 units during the 4 days lead time - this happens 10% of the time when units are ordered. What levels of safety stock should the firm consider? Which level is best