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Annual demand for a product is 13000 units; weekly demand is 250 units with a standard deviation of 40 units. The cost of placing an order is $100. The replenishment lead time is 4 weeks. Annual carrying cost is $0.65/unit.
a) To provide 98% service level what must the reorder point be?
b) If a new safety stock policy is being considered that reduces safety stock by 100 units, what is the new service level?
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