XYZ Company buys a component from a distant vendor six(6) times a year in lots of 630 units (EOQ). It takes an average of twelve (12) days to receive an order from the time it is placed. The units cost two dollars ($2.00) each and have a carry cost of fifty cents ($.50). The firm estimates a stockout cost of eighty five cents ($.85) per unit. The probability distribution of demand during a twelve (12) day period is as folows:

Demand 144 152 160 168 176 184 192

Probability .01 .04 .20 .50 .20 .04 .01

1) Calculate the safety stocks (SS) for reorder points 168 and 176 (units).

2) Calculate the additional annual carry costs (H) for the reorder points 168 and 176 (units).

3) Calculate the annual expected stockout costs (Cs) for the reorder points 168 and 176.