Question: Stewart Corporation is a major automobile manufacturer It purchases steering

Stewart Corporation is a major automobile manufacturer. It purchases steering wheels from Coase Corporation. Annual demand is 10,400 steering wheels per year or 200 steering wheels per week. The ordering cost is \$ 100 per order. The annual carrying cost is \$ 13 per steering wheel. It currently takes 1.5 weeks to supply an order to the assembly plant.

Required
1. What is the optimal number of steering wheels that Stewartâ€™s managers should order according to the EOQ model?
2. At what point should managers reorder the steering wheels, assuming that both demand and purchase-order lead time are known with certainty?
3. Now assume that demand can vary during the 1.5-week purchase-order lead time. The following table shows the probability distribution of various demand levels:
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If Stewart runs out of stock, it would have to rush order the steering wheels at an additional cost of \$ 9 per steering wheel. How much safety stock should the assembly plant hold? How will this affect the reorder point and reorderquantity.
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