1. (8 points) Wegmans sells a basket of assorted chocolate at a selling price of $20. The unit procurement cost for one basket is $8. Weekly demand for this product is normally distributed with a mean of 500 boxes and a standard deviation of 50.The replenishment lead time is a month and the store manager has decided to review the inventory every two weeks. Wegmans incurs $2 to hold an unsold basket over to the next review period. Assume that any excess demand is backordered with the cost of handling each back-order being $10 per unit. (A month=4 weeks)

a) (2 points) What is the desired service level?

b) (4 points) What is the optimal base-stock level and safety stock?

c) (2 points) What is the optimal safety stock if the store manager decides to review the inventory every week?