Weekly demand for gaming consoles at Liverpool, a Mexican department store chain, is normally distributed with a mean of 1,000 and a standard deviation of 400. The replenishment lead time from the supplier is four weeks.
Liverpool is targeting a CSL of 95 percent and uses a periodic review policy under which it reorders consoles every eight weeks. What is the average order size?
How much safety inventory of consoles should Liverpool carry?
What should its order up to level be? How much safety inventory would be required if Liverpool switched to a continuous review policy?