Gadge-Go, a gadget specialist national retailer, is about to spend big on advertising for its new "One-Tool- Caker" (a cake maker). This tool, produced by a specialty factory in Cambodia, is an all-in-one chopper/splicer/ dicer/ shredder/ masher/ stirrer/ folder/ smoother / piper. What kitchen wouldn't need one?

Gadge-go anticipates strong demand, at least for the first year. Because the company takes orders by telephone only (and these customers won't tolerate delays), inventory must be on hand ready for shipment.

From past experience, Gadge-Go has provided you with the following data about product expectations for year 1:

• Daily average customer sales (normal distribution -365days) 167
• Daily sales variation (as standardsales deviation): 29
• Time required from factory order toarrival (days): 36
• Cost of placing a factory order (translator,contractexchange): $127
• Opportunity cost ofcapital(annual): 14%

• "One-Tool-Caker"value $23.50

• Requiredservice level 75% (companystandard)

Tasks: (Total 10marks)

1. Recommend to Gadge-go an order quantity and reorder point for the One-tool- caker based on a continuous review system foryear1. (3marks)
2. For results in Part 1, provide an explanation for the method used to calculate the z-score. Is the safety stock level adequate? Why orwhynot?(1marks)
3. Gadge-go wishes to compare results in Task 1 with a periodic review system. What review period and target inventory period would you recommend? Has the safety stock level now changed, and ifso, why? (3marks)
4. Make a recommendation for the inventory control system used by Gadge-go under the assumption that the One-Tool-Caker is class A product early in the lifecycle (year 1) and falls to class C product later (year 2) as new more advanced products becomeavailable. (1marks)
5. Explain in detail the characteristics of the system recommended in Part 4 and the rationale for itsimplementation. (2 marks)