E. Cassorla's Clothe: sells a large number ofth dress shirts. The shirts, which bear the store label, are shipped from a manufacturer in New \"fork City- I-ly Cassorla, the proprietor, says, III wantto be sure that I never run out of dress shiris. i always tryr to keep at least atwo months' supply in stock When my inventory drops below that level, 1 order another twomonth supply. I've been using that method for 20 years, and it works." The shirt cost $5 each and sell for $15 each. The cost of processing an order and receiving new goods amounts to $31], and it takes three weeks to receive a shipment. Monthly demand is approximately normally distributed with mean 120 and standard deviation 32. Assume a 2D percent annual interest rate for computing the holding cost. a] What value of [land it is Hy Cassorla using to control the inventory ofwhite dress shirts? bl What ll rate [Type 2 service level} is being achieved with the current policy? c} Based on a 99 percent ll rate criterion, determine the optimal values of l[land It that he should be using. [Assume four weeks in a month for your calculations.) dl Determine the difference in the avEIage annual holding and setup costs between the policies in part: [b] and (cl. ir'. Consider an item whose replenishment follows periodic review lit, 3] policy: every it periods, an order is placed to raise the inventory position to .5\". The demand ofthe item during a on e- week interval follows normal distribution with mean It'll]l and standard deviation 1D. The replenishment interval it is set as twoweeks. The management would like to set an orderup- to level .5' in such a way that the probability of observing stock-outs will not exceed 105. The lead-time for replenishment is 4 wee ks. al What is the appropriate safety stock level forthe item?I bl What should be the order-up-to level 5? 3. Consider an item whose inventory is controlled by a periodicreview, basestodi policy. Suppose the review period is T days, the replenishment lead time is 3 days, and the daily demand is normally distributed with mean 2D and standard deviation 4. a] What is the base-stock level to assure a Type | service level ofElSil'E? bl What is the corresponding average inventory level? c} How many stock-out events might you expect in a year