45. Auto Care Limited provides several auto parts to local garages in a small city. The company purchases parts from manufacturers in accordance with the EOQ model and sends the parts from its regional warehouse direct to its customers. For a particular part, the analysis recommends orders with EOQ =

50 boxes to satisfY an annual demand equal to 800 boxes. The company has 250 working days per year and the lead time averages 15 days.

(a) What is the re-order level if Auto Care assumes a constant demand rate?

(b) A further analysis of Auto Care demand for the product in question shows that lead time demand follows normal probability distribution withμ= 25 and a= 4 boxes. If the company management can tolerate one stock-out per year, what is the revised re-order level? If holding cost per box per year is Rs 5, what is the extra cost due to uncertainty of demand?

(c) What is Auto Care's re- order level if the company is willing to tolerate two stock-outs per year?

(

d) What is Auto Care's re-order level if the company wants to restrict the probability of stock-out on any one cycle to at most one percent?