OfficePlus (OP) imports a special type of office paper from Germany, through TrazTudo (T&T). Both OP and T&T work 5 days per week (from Monday to Friday), 52 weeks per year. OP owns a central warehouse in Oeiras (working from Monday to Friday) that supplies all the stores at a national level. OP receives orders from stores (clients) on a daily basis between 10am and 8pm. The OP warehouse delivers orders to stores two days after receiving the purchase orders, and place orders to its supplier (directly to T&T) in line with the aggregated demand of all the stores. T&T delivers orders to OP all Mondays before 10am, directly to the central warehouse in Oeiras. Orders are delivered according to orders received until the Friday before, 8pm. The following is known:

- Average daily demand for the stores (in units) = 500

- The standard deviation of demand (in units) = 50

- The cost of placing an order is 55

- The purchase cost is 52 per unit

- The holding cost is 27% per year

- A LOS of 99.9% is desired

- The current stock at 8pm on Friday is 1354 units

a. Assuming that it is Friday 8pm, how much should be ordered to T&T?

[Final answer: 1492 units]

b. The operations management team is currently assessing the change to a continuous review model, so that 10 are saved in the ordering cost and the lead time is reduced by 1 day. Should the OP change to this continuous review model?

[Final answer Cost before = 6.785.260,4, Cost after = 6.514.655 , accept]