Problem $10-29($Algorithmic$)$

Floyd Distributors, Inc., provides a variety of auto parts to small local garages. Floyd purchases parts from

manufacturers according to the EOQ model and then ships the parts from a regional warehouse direct to its

customers. For a particular type of muffler, Floyd's EOQ analysis recommends orders with $Q^{**}=20$ to satisfy an

annual demand of $190$ mufflers. Floyd's has $250$ working days per year, and the lead time averages $15$ days.

Note: Use Appendix B to identify the areas for the standard normal distribution.

a$.$ What is the reorder point if Floyd assumes a constant demand rate? If required, round your answer up to the

nearest whole number.

$r=$

b$.$ Suppose that an analysis of Floyd's muffler demand shows that the lead$-$time demand follows a normal probability

distribution with $=11$ and $=1\mathrm{.}7.$ If Floyd's management can tolerate one stock$-$out per year, what is the

revised reorder point? If required, round your answer up to the nearest whole number.

$r=$

c$.$ What is the safety stock for part $($b$)?$ If $C_h=$$$\frac{5}{?}$ unit$/$year$,$ what is the extra cost due to the uncertainty of

demand?

Safety Stock $=$

units

Added Cost $=$$

$/$ year