Joe Henry (see question 12.13) notices that the demand for the unit he is studying is not constant, but can reasonably be approximated by a normal distribution with average weekly demand of 50 units and a standard deviation of 15 units. (All other data are as in question 12.13 (Problem 2), including the modified lead time of two weeks.)
a) If the cycle service level is to be set at 98%, find the reorder point as well as the level of the safety stock
b) Find the total annual inventory cost of this system, including the cost of the merchandise and the holding cost of the safety stock.