You own a small ice-cream and milkshake store. You currently source three flavors of ice-cream from a local ice cream manufacturer, Cherry View Ice Creams. The three flavors you source are: Strawberry, Vanilla Choco-Chip, and Raisin. The daily demand for each flavor in pounds is as follows:

Strawberry: Mean daily demand: 100 lbs/day, Standard Deviation of daily demand : 20lb

Vanilla Choco Chip: Mean daily demand: 150 lbs/day, Standard Deviation of daily demand: 25lb

Raisin: Mean daily demand: 90 lbs/day, Standard Deviation of daily demand: 30lb

You decide to adopt a delayed differentiation strategy, where you will only order vanilla (enough to meet the mean demand for all three flavors) and just add flavorings/toppings at the last minute to create the three flavors.

If the cost of holding safety stock is $0.50 per pound per month, and the lead time of deliveries from Cherry View Ice Cream is 2 days. The targeted service level is 98%, and the z-table is as given below is 2.05.

1. Which of the following is the correct monthly inventory holding cost for the safety stock of the common vanilla flavor? (Pick the closest answer)

$63.5

$93.5

$103.5

$110.5