Weekly demand for Legos at a Walmart store is normally distributed, with a mean of 2,500 boxes and a standard deviation of 300. The replenishment lead time is two weeks. Assuming a
continuous- review replenishment policy, evaluate the safety inventory that the store should carry
to achieve a CSL of 90 percent (z= 1.28).
a. Calculate SS? ROP? (20pts)
b. The inventory cost of 1 Legos box is $12 per year while the cost of placing an order is $50.
How often should Walmart replenish the Legos and how many Legos boxes should Walmart
order each time? How many orders per year? (30pts)
c. Using the result from b (time between orders T), if Walmart uses periodic review policy (P
system), how much is the Target inventory level and how much is the SS? (20pts)