A product with an annual demand of 1,000 units has Co = $24.50 and Ch = $7. The demand exhibits some variability such that the lead-time demand follows a normal probability distribution with = 25 and = 5.

(a) What is the recommended order quantity? (Round your answer to the nearest integer.)

(b) What are the reorder point and safety stock if the firm desires at most a 5% probability of stock-out on any given order cycle? (You may need to use the appropriate appendix table or technology to answer this question. Round your answers to the nearest integer.)

reorder point

safety stock

(c) If a manager sets the reorder point at 30, what is the probability of a stock-out on any given order cycle? (Round your answer to four decimal places.)

How many times would you expect a stock-out during the year if this reorder point were used? (Round your answer to the nearest integer.)