Wolfgang Heinz stocks an item with a unit cost of $80, reorder cost of $100 and holding cost of $2 a unit a week. Demand for the item has a mean of 100 a week with standard deviation 10.

Lead time is constant at 3 weeks. Design an inventory policy for the item to give a service level of 95%. How would you change this to give a 90% service level? What are the costs of these two policies?