The B&S Novelty and Craft Shop in Bennington, Vermont, sells a variety of quality, handmade items to tourists. It will sell 300 hand-carved miniature replicas of a colonial soldier each year, but the demand pattern during the year is uncertain.
The replicas sell for $20 each, and B&S uses a 15-percent annual inventory-holding cost rate.
Ordering costs are $5 per order, and demand during the lead time follows a normal distribution, with a mean of 15 and a standard deviation of six.

a. What is the recommended order quantity?

b. If B&S is willing to accept a stockout roughly twice a year, what reorder point would you recommend?
What is the probability that B&S will have a stockout in any one order cycle?

c. What is the safety stock level and annual safety stock costs for this product?