MicroSystem manufactures two laptop models, Z1 and Z2, on two dedicated assembly lines. The monthly demand for each laptop model is normally distributed with a mean of 300 units and a standard deviation of 50 units. One special chip is needed in each laptop. It's the same chip in both laptops but the two lines are operated completely separately from each other: They order from the same supplier independently. The supplier ships to the two assembly lines separately. The supplier charges $45 for each chip, and ships the item via FedEx, with a guaranteed delivery time of 2 days (= 1/15 months). Each shipment costs a fixed cost of $120. The annual holding cost rate is 12%. (1) Determine the economic order quantity of the chip on each line. (2) If the desired service level is 90%, what should the safety stock and reorder point be? (3) If an assembly line stocks out of the chip, its production is halted, costing $100 per chip short. Calculate the total annual cost (including purchase, holding, ordering, and shortage costs) associated with this item. MicroSystem is now evaluating a proposal to consolidate the orders of the chips. Under this proposal, when