2. Littlefield Laboratories, LLC (LL) provides an integrated genetic test called MaterniT 21 PLUS for expectant parents in Northern California. LL charges its customers a premium price of $1,900 per test and promises to return the result within 24 hours after receiving the order; otherwise a rebate will be provided. LL runs 24×7 and customer orders for the test come into the lab with blood samples on a continuous basis. Demand for the test is relatively stable at an average of 3,000 tests per month, with an estimated standard deviation of 100 tests for the weekly demand. (Assume 4.3 weeks per month.) Each test requires an advanced testing kit that can be purchased from a sole supplier at a wholesale price of $600 each. LL can purchase the testing kits from the supplier in a batch. The supplier charges a fixed ordering cost (including shipping) of $6,000 for each batch LL orders, regardless of the size of the batch. It will take exactly 7 days for the supplier to deliver the batch to LL after LL places the order. If LL runs out of inventory, the backlog cost is estimated to be $156 per unit. As soon as the batch is delivered, LL pays the supplier out of its operational cash account, which generates annual interest of 8% for LL. Test kits are very small parts that do not require any physical resources (e.g., extra space or climate control) to hold.

Which of the following is/are appropriate strategies for making the inventory decisions? (Select all that apply.)

*Use the ROP model to determine when to place replenishment orders.

*Use the EOQ model to determine the reorder point to trigger the replenishment order to keep a good amount of testing kits on hand during the 7-day supplier lead time.

*Use the EOQ model to determine how many testing kits to order each time.

*Use the Newsvendor model to determine how many testing machines to purchase.

*Use the Newsvendor model to determine the optimal service level.

*Use the EOQ model to determine how many operators to staff for each shift.

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