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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) |
- What is the EOQ for the laptop? (3 marks)
- 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)
- 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)
- What is the reorder point for the laptop and how much of this consists of safety stock? (4 marks)
- 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)
- 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)