Tinsel Town is a tennis racket wholesaler that operates 50 weeks per year. Management is trying to determine an inventory policy for its ACE-2 rackets, which have the following characteristics:
Demand (D) =2,000 units/year
Demand is normally distributed
Standard deviation of weekly demand = 19 units
Ordering cost = $50/order
Annual holding cost (H) = $35/unit
Desired cycle-service level = 90%
Lead time (L) =6 weeks
a. If the company uses a periodic-review system, what should P and T be? Round P to the nearest week.
b. If the company uses a continuous-review system, what should R be?