Problem $7-13($Algo$)$

Talbot Industries is evaluating its service level policy for a product that is considered critical to customers.

Demand for the item averages $220$ units per day and the lead time from the supplier of the item averages

$4$ days. An analysis of demand and lead time patterns has shown that the standard deviation of demand

during lead time is $230$ units. The existing service level policy allows for a stockout probability of $15$

percent during the replenishment cycle. Marketing managers claim that the item is so critical that the firm

should carry two standard deviations of safety stock. Use Table $7-2.$

If the item cost is $$110$ and Talbot's inventory carrying cost is $20$ percent, what is the incremental inventory

carrying cost of following the suggestion of the marketing managers?

Note: Round your intermediate calculations and final answer to the nearest whole number.