Consider an item with A = $25; D = 4, 000 units/year; v = $8/unit; L = 1 month;

σL = 100 units; TBS = 6 months; and r = 0.16 $/$/year.

a. Compute the reorder quantity of the (s, Q) policy using the EOQ.

b. Compute the safety factor, SS, and reorder point.

c. Graph TBS versus ETVSPY (the expected total value short per year).