Question: Demand for an item is Normally distributed with a mean of 1,000 units a month and a standard deviation of 100 units. Currently they check

Demand for an item is Normally distributed with a mean of 1,000 units a month and a standard deviation of 100 units. Currently they check stock every three months and lead time is constant at one month. They wish to maintain a 98% service level and the holding cost is $20 a unit a month.

They are considering increasing the review period to every four months. How will this change impact their safety stock costs?

Answer choices = increase by 969.64, increase by 1169.64, increase by 1069.64, increase by 869.64

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