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Elyssas Elegant Eveningwear (EEE) needs to ship finished goods from its manufacturing facility to its distribution warehouse. The daily demand from the distribution warehouse is normally distributed with mean 900 gowns, and standard deviation 140 gowns. It costs the distribution warehouse $0.3 for holding one gown for one day.

EEE set the critical ratio at 90%.

EEE uses a premium parcel service for the gown delivery. The lead time L = 5 days. The effective lead time L+1 = 6 days. Each shipment is charged a fixed $200 cost.

QUESTION: If the demand standard deviation gets higher, which of the following statements is WRONG?

A. The reorder point r should be adjusted to a higher level.

B. More safety stock should be held.

C. The order batch size should be larger.

D. None of the above.