Weekly demand for private label washing machines at Karstadt, a German department pore chain, is Normally distributed with a mean of 500 and a standard deviation of 300. Karstadt currently has a supply source in China that delivers machines that cost 190 euros. The lead time to send machines from China to Karstadt facilities is Normally distributed with a mean of seven weeks and a standard deviation of two weeks. Recently, a European supplier has offered Karstadt to deliver washing machines with a guaranteed leadtime of four weeks at the cost of 220 euros.

The setup cost to place an order from China is 500 euros, and the setup cost to place an order from the European supplier is 50 euros. Karstadt has a weekly holding interest rate of 25 percent and targets a service level of 99 percent.

a)Provided its proximity and the assurance of the max (but fixed) leadtime from the European supplier, yet a higher cost, should Karstadt accept the European supplier's offer?

b)Now, assume Karstadt works very close to the source in China and can reduce the leadtime variability to zero. Would you still keep your previous decision (part a.)?

explain step by step specifically, solving the exercises without using excel