The monthly demand for the latest computer at Newland Computers follows a normal distribution with a mean of 350 and standard deviation of 75. Newland purchases these computers for $1,200 and sells them for $2,300. It costs the company $100 to place an order and $12 for every computer held in inventory at the end of each month. Currently, the company places an order for 1000 computers whenever the inventory at the end of a month falls below 100 units. Assume that the beginning inventory is 400 units, unmet demand in any month is lost to competitors, and orders placed at the end of one month arrive at the beginning of the next month.

a. Create a spreadsheet model to simulate the profit that the company will earn on this product over the next two years. Use 5000 replications. What is the average level of profit the company will earn?

b. Suppose that the company wants to determine the optimum reorder point and order quantity. Which combination of reorder point and order quantity will provide the highest average profit over the next two years?