Question: Each week, a computer store sells an average of 100 sets of external hard drive. Weekly demand is normally distributed with a standard deviation of

Each week, a computer store sells an average of 100 sets of external hard drive. Weekly demand is normally distributed with a standard deviation of 4 sets. The store orders hard drives from a regional distributor. The time for the new order to arrive has a mean of 1 week and standard deviation of 0.5 week. The cost of placing each order is $100, and the weekly cost of holding one set of hard drive in inventory is $2. The per-unit stockout cost is assumed to be $10. The store is willing to assume that all demand is back-logged.

(a) (3) Determine a good size of order.

(b) (6) Determine a good reorder point.

(You have to use the following critical point for standard normal distribution: z0.5 = 0.0, z0.55 = 0.1, z0.6 = 0.2, z0.65 = 0.3, z0.7 = 0.5, z0.75 = 0.6, z0.8 = 0.8, z0.85 = 1.0, z0.9 = 1.2, z0.95 = 1.6, z0.99 = 2.3, z0.999 = 3.0. If you can not find the exact number, please use the closest number as an approximation.)

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