The Home&Garden chain of superstores imports decorative planters from Italy. Weekly demand for planters averages 2000 with a standard deviation of 800. Each planter costs $15. HG incurs a holding cost of 30% per year to carry inventory. HG has an opportunity to set up a superstore in the Phoenix region. Each order shipped from Italy incurs a fixed transportation and delivery cost of $8000. Delivery lead time from Italy is 4 weeks (no variability) and HG would like to provide its customers a cycle service level of 99%. Consider 52 weeks in the year.
Determine the optimal inventory policy for
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