Question 3 (40 points) A company buys and sells a product "awesome". They purchase the product for 1.5TL per unit. The cost of order processing is 100TL per order. The company uses %28 annual interest rate for inventory holding costs. The monthly demand for the product has a normal distribution with standard deviation of 77 and mean 280 units. They have a 5 month order lead time. The company assumes that if they can not satisfy a customer request on time and have to backorder, it costs them 12.80TL per unit. There are 52 weeks in a year. a. Find the optimal order quantity and the reorder level. Determine the average annual cost of holding, setup, and stock-out when this optimal policy is used. b. What would be the average annual cost if the lead time demand had zero variance? c. What if the company is not sure about the backorder cost and decides to use a Type 2 %95 service level. What are the optimal values of order quantity and reorder point? What is the imputed shortage cost? d. What is the holding cost difference between using a Type-1 %95 and Type-2 %95 service level objectives? Question 3 (40 points) A company buys and sells a product "awesome". They purchase the product for 1.5TL per unit. The cost of order processing is 100TL per order. The company uses %28 annual interest rate for inventory holding costs. The monthly demand for the product has a normal distribution with standard deviation of 77 and mean 280 units. They have a 5 month order lead time. The company assumes that if they can not satisfy a customer request on time and have to backorder, it costs them 12.80TL per unit. There are 52 weeks in a year. a. Find the optimal order quantity and the reorder level. Determine the average annual cost of holding, setup, and stock-out when this optimal policy is used. b. What would be the average annual cost if the lead time demand had zero variance? c. What if the company is not sure about the backorder cost and decides to use a Type 2 %95 service level. What are the optimal values of order quantity and reorder point? What is the imputed shortage cost? d. What is the holding cost difference between using a Type-1 %95 and Type-2 %95 service level objectives