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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. El diablo is popular even at the exorbitant price Smylie & Son charges, so the company is loath to run out of stock and has set its service level at a respectable 99 percent. What should the safety stock be? a. 1,520 b. 1,256 c. 1,044 d. 1,448
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