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Inventory policy at Bank Drugs under periodic review system

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Bank Drugs wishes to determine how many tablets of a new arthritis medication it should order. Its policy is to order from the manufacturer every other week and maintain a safety stock of 120 tablets. Based on past weeks sales, Bank estimates that it sells 800 tablets of the medication each week. The lead time for delivery of the medication is three days. If its current inventory is 350 tablets, determine how many tablets of the medication it should order. Assume Bank is open seven days a week.

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Provides step by step solution to derive inventory policy for Bank Drugs.

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This is the case of periodic order review system. The review period is 2 weeks:

D = demand per week = ...

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