Question 3B

CWD sports centersells Mountain Bikes, which it orders from the USA. Because of shipping and handling costs, each order must be for 20 Bikes. Because of the time it takes to receive an order, the company places an order every time the present stock drops to 10 Bikes. It costs $20 to place an order. It costs the company $100 in lost sales when a customer asks for a Bike and the warehouse is out of stock. It costs $50 to keep each Bike stored in the warehouse. If a customer cannot purchase a Bike when it is requested, the customer will not wait until one comes in but will go to a competitor. The following probability distribution for demand for Bikeshas been and the time required to receive an order once it is placed (lead time) has the following probability distribution:

\fdema 8 .5 .8 6 .3 .5 1 .2 .2 .5 .3 .7 5 .3 nd 5 4 O 2 U 6 4 7 8 3 2 7 0 6 lead 4 .7 .3 .5 .6 .2 .5 1 0 O A time 4 5 6 4 U Use the following headings lead- SOCOC TC Month OI URA I RN D D FEI SO order RN time IC