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9 . Floyd Distributors, Inc., provides a variety of auto parts to small local garages. Floyd purchases parts from manufacturers according to the EOQ model

9. Floyd Distributors, Inc., provides a variety of auto parts to small local garages. Floyd purchases parts from manufacturers according to the EOQ model and then ships the parts from a regional warehouse direct to its customers. For a particular type of muffler, Floyd's EOQ analysis recommends orders with Q^*=25 to satisfy an annual demand of 200 mufflers. Floyd's has 250 working days per year, and the lead time averages 15 days. a. What is the reorder point if Floyd assumes a constant demand rate? b. Suppose that an analysis of Floyd's muffler demand shows that the lead-time demand follows a normal probability distribution with \mu =12 and \sigma =2.5. If Floyd's management can tolerate one stock-out per year, what is the revised reorder point? c. What is the safety stock for part (b)? If C_h=$ 5/ unit/year, what is the extra cost due to the uncertainty of demand?

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