Problem $7-13($Algo$)$

Talbot Industries is evaluating its service level policy for a product that is considered critical to customers. Demand for the item

averages $115$ units per day and the lead time from the supplier of the item averages $4$ days. An analysis of demand and lead time

patterns has shown that the standard deviation of demand during lead time is $125$ units. The existing service level policy allows for a

stockout probability of $15$ percent during the replenishment cycle. Marketing managers claim that the item is so critical that the firm

should carry three standard deviations of safety stock. Use Table $7-2.$

If the item cost is $$60$ and Talbot's inventory carrying cost is $20$ percent, what is the incremental inventory carrying cost of following

the suggestion of the marketing managers?

Note: Round your intermediate calculations and final answer to the nearest whole number.