The Home&Garden chain of superstores imports decorativeplanters from Italy. Weekly demand for planters averages 2000 witha standard deviation of 800. Each planter costs $15. HG incurs aholding cost of 30% per year to carry inventory. HG has anopportunity to set up a superstore in the Phoenix region. Eachorder shipped from Italy incurs a fixed transportation and deliverycost of $8000. Delivery lead time from Italy is 4 weeks (novariability) and HG would like to provide its customers a cycleservice level of 99%. Consider 52 weeks in the year.
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