46. A firm with an annual demand of approximately 3,000 units has an ordering cost of Rs 30 per order and a holding cost of Rs 8 per unit per year. The demand exhibits some variability such that the lead time demand follows normal distribution withμ= 120 units and a= 20 units.

(a) What is the recommended order quantity?

(b) What is the re-order point and the safety stock if the firm desires a 2% probability ofstockout in a given order cycle?

(c) If the re-order point is set at 140 units, what is the probability of a stockout in any given order cycle? How many times would you expect to stockout during the year if this re-order point were used?