Problem 2. (15 points) The annual demand for a specific product is 3,500 units and has the following ordering and holding costs: Co = $20.50 per order and Ch = $8.00 per unit. Demand exhibits some variability such that the lead-me demand is approximately normally distributed with = 45 units and = 12 units.

Problem 2a. (2.5 points) What is the recommended order quanty for this product? Express your answer as a whole number using standard rounding rules.

Problem 2b. (2.5 points) If the manager sets the reorder point at 55 units, what is the probability of a stockout in any given order cycle? Express your answer as a decimal to 4 decimal places using standard rounding rules.

Problem 2c. (2.5 points) Given the probability of a stockout in problem 2b, how many mes would expect a stockout to occur during the year if the reorder point = 55 units were used? Express your answer to 2 decimal places using standard rounding rules.