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Harvey's Specialty Shop is a popular spot that specializes in international gourmet foods. One of the items that Harvey sells is a popular mustard that

Harvey's Specialty Shop is a popular spot that specializes in international gourmet foods. One of the items that Harvey sells is a popular mustard that he purchases from an English company. The mustard costs $26 a jar and requires a 3-month lead time for replenishment of stock. The replenishment time is constant. Harvey uses a 20% annual interest rate to compute holding costs. Bookkeeping expenses for placing an order amount to about $ 60. During the 3-month supply time, Harvey estimates that he sells an average of 150 jars but there is substantial variation. He estimates the standard deviation of demand for each 3-month period is 25. Assume that demand is described by a normal distribution. (5+5+5+12+13+20=60 points ) a) What is the optimal order quantity? b) What will be the average time between transactions? c) How much safety stock should be maintained for 96% cycle service level?

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