Weekly demand for 12 frames at the Frame Shop is normally distributed with a mean of 250 and a standard deviation of 150. The store manager currently monitors inventory every 3 weeks. The manufacturer takes two weeks to fulfill an order once it is placed. Each unit costs (c) $2 and incurs a holding cost (h) of 25%. Shipments have a fixed cost (S) of $100.

A. What safety inventory must the shop maintain to achieve a cycle service level of 95%? What is the appropriate order up to level?

B. Management is considering a continuous review policy. They have identified a system and software that would add $150 in additional costs annually. What is the reduction in safety inventory due to the continuous review policy? Does the annual savings in inventory-related costs justify the implementation of the continuous review policy?