MARGI sells different types of wine. Customers place orders to the most popular "Summer Wine" at a rate of 125 bottles a month on the average. The store buys this wine from WSCo at $5 a bottle, and a required lead-time of 1.5 weeks. Ordering cost per order for MARGI is $14, and annual holding rate is 22%. Management is worried about daily variations of the demand, thus has decided to increase the EOQ order size by a lot.

To apply the cycle-service-level policy MARGI estimated the monthly standard deviation of demand at 53.5 bottles, where one month is considered 4 weeks.

1.Which statement is correct about the re-order point.

a.The re-order point can be calculated by (1.5/4)*52)*125+sqrt((1.5/4)*52)*53.5

b.Please provide the service level required SL, and then I will follow with norm.inv(SL,125,53.5)

c.Please provide the service level required SL, and then I will follow with norm.inv(SL,125*(4/1.5),53.5*sqrt(4/1.5))

d.Please provide the service level required SL, and then I will follow with

norm.inv(SL,125(1.5/4),53.5*sqrt(1.5/4))

2.Management allows holding cost of safety stock to amount to 25% of the annual holding cost of the EOQ policy. What cycle service level can MARGI achieve with this amount of money? Calculate and show your work.