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ATK-Auto obtains one of the critical parts from its sub-constructor located in China. Daily demand at the production plant in Roma is
a. Assuming that ATK follows a continuous review policy, what reorder point and safety inventory should the warehouse aim for when using sea or air transportation?
b. How many days of cycle inventory does ATK carry under each policy?
c. Which policy (sea or air) would you recommend to ATK to minimize total cost (transportation and inventory carrying costs)?
d. Does your answer (found in c) change if ATK pays for the parts when they receive the products at their production plant?
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