Assume that everything is the same as in QUESTION 1, except that the operations manager at Yeo GM Trading does not have the annual demand information as what we assumed in QUESTION 1. But there is information indicating that the demand during the WHOLE three month lead time is normally distributed with mean 250 and standard deviation 100. (2a) What level of safety stock of the decoration lamp should Yeo GM Trading carry? Answer (26) What should its reorder point be? Hint the answer should be between 400 to 420 Answer QUESTION 1 Yeo GM Trading in Singapore sells decoration lamps for weddings. The manager purchases the decoration lamp for $10 each. Based on the historical demand, the annual demand for the decoration lamp is estimated to be normally distributed with mean 1000 and standard deviation 200. The manager orders the decoration lamp from an overseas supplier and faces a three-month lead time from the initiation to the receipt of an order. The accountant estimates that the fixed cost to initiate and receive an order is $40, and recommends a 20 percent annual interest rate for determining holding cost. In other words, the fixed ordering cost K is $40 per order, and the annual inventory holding cost for the decoration lamp is 20 percent of the product cost, that is, 20 percent of $10 per lamp per year. The manager is targeting at a service level of 95 percent for the decoration lamp The following table provides a list of z values for different values of the service level Service level 90% 1.29 91% 1.34 93% 1.48 95% 1.65 97% 1.88 99% 2.33 Z