Through its online accessory store, Gateway sells its own products, as well as products made by other companies. One of these products is the WB150 Wolf Byte laptop computer:
a. (*) What is the economic order quantity for the laptops? Calculate annual ordering costs and holding costs (ignoring safety stock) for the EOQ.
b. (**) What is the reorder point for the laptops? How much of the reorder point consists of safety stock?
c. (**) Suppose Gateway decides to order 64 laptops at a time. What would its yearly ordering and holding costs (ignoring safety stock) for the monitor be?
 d. (**) Because computer technologies become obsolete so quickly, Gateway is thinking about raising holding costs from 40% of item cost to some higher percentage. What will be the impact on the economic order quantity for laptops? Explain why.
For parts e and f, use the following formula to consider the impact of safety stock (SS) on average inventory levels and annual holding costs:
e. (***) What is the annual cost of holding inventory, including the safety stock? How much of this cost is due to the safety stock?
 f. (***) Suppose Gateway is able to cut the lead time to a constant 1 week. What would the new safety stock level be? How much would this reduce annual holding costs?
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