Explain the relationship between Holding Cost, Setup Cost and Total Cost for the EOQ. Use

illustrations where necessary. $(12$ Marks$)$

b$.$ The average daily demand for Lenovo laptop computers at a Circuit Town store is $15,$ with a

standard deviation of $5$ units. The lead time is constant at $2$ days.

i$.$ Find the reorder point if management wants a $90\%$ service level $($i$.$e$.,$ risk

stockouts only $10\%$ of the time$).(5$ Marks$)$

ii$.$ How much of this is safety stock?