Fry’s electronics, a large electronics retailer, purchases 1TBhard disks and sells them to customers. The store operates ona continuous review inventory system.

- Weekly demand for disk drives is independent and normallydistributed with a mean of 50 and a standard deviation of 15.

- Lead time is 2 weeks

- Holding cost for a disk drive is $1/unit/week

- Ordering costs are $400.00/order

- Desired fill rate is 98.0%

a. What order quantity and reorder point, (Q, R), should thedistribution center use?

b. What order quantity and reorder point, (Q, R), should thedistribution center use if, instead of a fill rate of 98%, apenalty cost of p = $10/unit is used instead?