The number of laptops sold each week by large electronics discount store is normally distributed with a mean of 50 units and a standard deviation of 10 units. The holding cost of a laptop is about $85 per year. Ordering costs are $100 per order. The Taiwanese supplier of the laptops provides a lead time of 2 weeks. Assume that the store is open all year round.

a. What is the economic order quantity (EOQ) for this laptop?

b. What is the total annual holding plus ordering cost for this laptop?

c. The VP of Marketing has specified a 99% service level for these laptops. What should the reorder point (ROP) be to achieve this service level?

d. What is the safety stock needed to attain the 99% service level?

e. If management decides that a 95% service level is acceptable, what are the new ROP and the new safety stock?

f. Because of a strike supplier lead time increases to 4 weeks for the foreseeable future. What are the new ROP and the new safety stock for a 99% service level?