2. A Computer Company sells a desktop computer that is popular among gaming enthusiasts. In the past few months, demand has been relatively consistent, although it does fluctuate from day to day. The company orders the computer cases from a supplier. It places an order for 5,000 cases at the appropriate time to avoid stockouts. The demand during lead-time is normally distributed with a mean of 1,000 units and a standard deviation of 200 units. The holding cost per unit per year is estimated to be $4.

a) How much safety stock should the company carry to maintain a 96% service level? (Using the table for the normal distribution, the Z value for a 96% service level is about 1.75)

b) What is the reorder point?

c) What would the total annual holding cost be if this policy is followed?