r = re-order point

s = order level

Chicago's Treadway Tires Dealer must order tires from its national warehouse. It costs $10,000 to place an order and $400 to review the inventory level. Annual tire sales are N (20,000, 4,000, 000). It costs $10 per year to hold a tire in inventory, and each order arrives two weeks after being placed (52 weeks _ 1 year). Assume that all shortages are backlogged. Estimate R and the number of orders per year that should be placed. Using the answer in part (a), determine the optimal (R, S) inventory policy. Assume that the shortage cost is $100 per tire