b. determining the time bucket size (i.e., year, quarter, month, week, day, etc.).
c. determining a relationship between a single dependent variable and one or more
d. identifying cyclical patterns.
An auto parts store (operates 350 days per year) in a major metropolitan area reviews its
inventory on a periodic basis using a computer system. It is experiencing some
problems with a tune-up kit. The kit is bought from PRC Tires, a U.S. manufacturer.
The annual demand for these kits is 10,500. The cost to carry a kit in the inventory for
one year is $4.90, and the cost to place a replenishment order is $17 per order.
Replenishment lead time is 4 days. The standard deviation of daily demand is 7 kits.
a. What should be the review period for these tune-up kits?
b. What is the optimal replenishment level without safety stock?
c. What is the optimal replenishment level with safety stock, assuming a 95 percent