2 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.

a Estimate R and the number of orders per year that should be placed.

b Using the answer in part (a), determine the optimal

(R, S) inventory policy. Assume that the shortage cost is

$100 per tire.