Upper Valley Warehouse adopts an (s, Q) inventory policy where all items meet a safety factor k = 1.2. Some of the B items enjoy a deterministic lead time of 1 month from their suppliers. They are the following products:

Demand Di vi σi,1 A Item i (Units/Year) ($/Units) (Units) ($)

1 1,000 50.00 300 100.00 2 2,000 30.00 700 100.00 3 1,000 100.00 700 100.00 4 800 80.00 500 120.00 5 1,000 35.00 400 120.00 6 3,000 150.00 800 120.00 7 600 210.00 200 150.00 Inventory carrying cost is 0.12 $/$/year. Reorder quantity is calculated by the EOQ.

a. Determine i. Implicit TBS for each product ii. ETSOPY iii. ETVSPY (expected total value short per year)

iv. SS in dollars

b. The firm has decided to allocate $50,000 into the SS of these products. What should be the individual safety factor, SS, and the reorder point under each of the following policies:

i. Same TBS for the 7 items ii. Minimize ETSOPY iii. Minimize ETVSPY