2. SAMESONG sells a popular and top of-the line model of HD4K TV sets. The cost of each TV set to the retail store is about $1,300, and the suggested price to the public is $1,795. WORLDWIDE STEREO is a specialty audio and video store that carries this model of HD4K TV set. At its store in Quaker Bridge Mall sales have been brisk, averaging 5 units per day and standard deviation of 2 units per day. WORLDWIDE STEREO uses a standard order quantity of 100 units for any product. Transportation, loading and unloading costs are estimated at $3,000 per shipment and the order lead time is 2 weeks. This store is open 7 days per week. Corporate headquarters uses a rate of 15% per year for cost of capital. The current reorder point is 70 units. Calculate: a. The economic order quantity for this model of TV. b. What is current safety stock? What is the probability of having a stock-out during an inventory cycle? c. The optimal number of orders per year and the time in weeks between two consecutive orders d. The safety stock and the reorder point for a service level of 97%. e. The total annual inventory cost.
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