SuperComputer is a computer store that sells

SuperComputer is a computer store that sells various computer hardware and software. You have been given the following information regarding a certain laptop:

Average weekly demand (52 weeks/year) 60
Standard deviation of weekly demand 12
Order lead time 3 weeks
Standard deviation of order lead time 0
Unit cost €350
Order cost €2
Annual unit holding cost €48
Service level 99% (z = 2.33)


  1. What is the EOQ for the laptop?                                                                                               (3 marks)


  1. Calculate annual ordering and holding costs for the laptop (ignoring safety stock). What do you notice and how would this affect your stocking policy?                                                                                                                                                                                                                       (5 marks)


  1. If SuperComputer currently order 120 laptops at a time, how much more or less would SuperComputer pay in annual holding and ordering costs if they were to order just 12 laptops at a time?                                                                                                             (5 marks)


  1. What is the reorder point for the laptop and how much of this consists of safety stock?                                                                                                                                                                                               (4 marks)


  1. What are the annual holding costs when considering safety stock? How much of this cost is due to the safety stock being held?                                                                                                 (4 marks)


  1. If SuperComputer want to reduce their order lead time to one week what would be the new safety stock and how would this affect annual holding costs?                                                                                                                                                                                                      (4 marks)


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