Two inventory policies have been suggested by the purchasing department of a company:

Policy 1. Order 150 units. The reorder point is 50 units, and the time between placing and receiving an order is 10 days.

Policy 2. Order 200 units. The reorder point is 75 units, and the time between placing and receiving an order is 15 days. The setup cost per order is $20, and the holding cost per unit inventory per day is $.02.

(a) Which of the two policies should the company adopt?

(b) If you were in charge of devising an inventory policy for the company, what would you recommend assuming that the supplier requires a lead time of 22 days?