1. Consider a fixed order quantity problem with the following parameters: average demand = 74,360 units/year; S = $792 per order; and H = $40 per unit per year.
   1. How much should be ordered each time an order is placed?
   2. Suppose that demand during the lead time is distributed normally with a mean of 600 units and a standard deviation of 60 units. If the desired fill rate is 99.5%, what is the reorder point?
   3. Suppose now that demand during the lead time is distributed according to the following discrete distribution (note that the distribution is not normal anymore):

Demand 255 405 555 705 855

Probability 0.15 0.20 0.20 0.10 0.35

What is the fill rate if ROP = 600? HINT: What is the expected number of shortages per cycle?