Dyson specializes in repairing vacuum cleaners. Dyson receives weekly deliveries from its vacuum cleaner belt supplier, who replenishes belts up to a level that Dyson appliance is free to specify. Dyson buys a very popular belt at a unit price of $17.50. The annual inventory carrying charge is 20%. Weekly demand for belts is normally distributed with mean 86 and standard deviation 24. Dyson management wants to limit the probability of a stock-out on any given week not to exceed 1%. (a) What replenishment level would you recommend? (b) What is Dyson’ average level of safety stock? (c) What is Dyson annual cost of holding cycle stock?

Dyson specializes in repairing vacuum cleaners. Dyson receives

weekly deliveries from its vacuum cleaner belt supplier, who replenishes belts up to a level

that Dyson appliance is free to specify. Dyson buys a very popular belt at a unit price of

$17.50. The annual inventory carrying charge is 20%. Weekly demand for belts is normally

distributed with mean 86 and standard deviation 24. Dyson management wants to limit

the probability of a stock-out on any given week not to exceed 1%.

(a) What replenishment level would

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