Comment:Mickey Grocery Store specializes in gourmet sauces that are purchased from overseas. The purchasing cost of a special brand of sauce is$10 per jar and requires a 6-month lead time.Mickey uses a 20% annual interest rate for computing holding costs and anticipates that penalty costs of not satisfying orders is $25 per jar. Ordering costs are about $50. During the replenishment lead time, the total demand is normally distributed with mean of 100 and standard deviation of 25.a) Assuming that Mickey uses a Q,r type policy, estimate the optimal Q* and r* (rounding to the nearest integer).b) Determine the annual costs of ordering, average inventory, and annual penalty costs.
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