4 7. An item is ordered by New Star Manufacturing Company in quantities of five thousand units at a time.

The cost price of the item is Rs 4 per unit. The average weekly demand for this item is 400 units with a mean absolute deviation (MAD) of250 units. The lead time is known to be equal to 2 weeks while the holding cost per unit per week is Re 0.01. The company has established a 95% service level in respect of this item.

Using the information given, determine

(a) level of safety stock,

(b) re-order point, (

c) annual cost of maintaining the safety stock.