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Smylie & Son uses a fixed-period system to manage its inventory of hand-rolled cigars. One model, the el diablo, enjoys robust demand at 480 boxes
Smylie & Son uses a fixed-period system to manage its inventory of hand-rolled cigars. One model, the "el diablo," enjoys robust demand at 480 boxes per week (20 cigars per box) with a standard deviation of 120. Cigars must be stored in a carefully controlled climate, so storage costs are $5/cigar per year. Smylie and Son's supplier is located on an island south of Miami, Florida, and ordering is complicated and thus expensive, at $1,500 an order. Even at that price, it takes an average of six weeks to receive a shipment. What should the replenishment level be? a. 5,280 b. 6,240 c. 5,760 d. 6,720
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