The Sonic Video Game Company is in the process of developing an inventory control system for purchasing integrated circuits (IC) that will cope with uncertainty. There are 24 ICs in each box. The following information represents the IC use:
Average demand during lead time = 500 IC boxes
Lead time = 1 month
Economic order quantity = 1,500 IC boxes
Forecast interval = 1 month
Mean absolute deviation of forecast error = 60 IC boxes
Desired probability of stocking out = 0.05.
a. How much safety stock will be required?
b. What is the reorder point?
c. What is the customer service level for this policy?

d. What decision rule should Sonic use in ordering ICs, assuming constant IC usage throughout the year?

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E(Z) The Service Function E(Z) .00 0.399 0.20 0.307 0.40 0.230 0.60 0.169 0.80 0.120 1.000.083 1.20 0.056 1.40 0.0370.200 1.60 0.023 1.80 0.014 2.00 0.008 2.20 0.005 2.40 0.003 2.60 0.001 2.80 0.001 3.00 0.000 0.450 0.400 0.350 0.300 0.250 0.150 0.100 0.050 0.000 0.00 0.50 1.00 .50 2.00 2.50 3.00 3.50 Number of Standard Deviations (Z)