A product with an annual demand of 900 units has Co = $18.50 andCh = $7. The demand exhibits some variability such that thelead-time demand follows a normal probability distribution with µ =26 and ? = 6. Note: Use Appendix B to identify the areas for thestandard normal distribution.
a) What is the recommended order quantity? Round your answer tothe nearest whole number.
b) What are the reorder point and safety stock if the firmdesires at most a 5% probability of stock-out on any given ordercycle? If required, round your answers to the nearest wholenumber.
Record point =
Safety stock =
c ) If a manager sets the reorder point at 32, what is theprobability of a stock-out on any given order cycle? If required,round your answer to four decimal places. P(Stockout/cycle) =
