II. Weekly demand for a certain product is normally distributed with mean 100 and standard

deviation 8. The source of supply is reliable and maintains a constant leadtime of 1 week. The

cost of placing an order is $10 and annual holding cost is $2 per unit. Assume 52 weeks per year.

Management wants to satisfy a 95% probability of not running out of stock in any one ordering

cycle.

1. What is the average demand during leadtime?

2. What is the standard deviation of demand during leadtime?

3. What should be the safety stock?

4. What should be the reorder point?

5. What should be the order quantity?

6. State the ordering policy by using a sentence.