Pick values for h and p; for instance, h = 0.2 and p = 0.5. Suppose that the demand random variables D1, . . . , DN are independent. Compare S to (cf. class notes for the definitions) for the following settings:

1. (10 points) Let N = 5, and let the demand distributions F1, . . . , FN all be normal with mean 10 and variance 2.

2. (1 point) Let N = 10, and let the demand distributions F1, . . . , FN all be normal with mean 10 and variance 2.

3. (1 point) Let N = 20, and let the demand distributions F1, . . . , FN all be normal with mean 10 and variance 2.

4. (8 points) How does the ratio S/ change with N? 1

5. (10 points) Let N = 10, and let the demand distributions F1, . . . , FN all be normal with mean 10 and variance 1.

6. (1 point) Let N = 10, and let the demand distributions F1, . . . , FN all be normal with mean 10 and variance 2.

7. (1 point) Let N = 10, and let the demand distributions F1, . . . , FN all be normal with mean 10 and variance 3.

8. (8 points) How does the ratio S/ change with the variance? 9. (10 points) What is the take-away lesson from this exercise?