What is the annual cost of carrying the safety stock

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Read-time demand for a product is uncertain, and has the following probability distribution:

Lead-time demand 5 10 15 20 25 30

Probability 0.05 0.1 0.3 0.35 0.15 0.05

Suppose the desired service level is 0.95.

a. Find the reorder level and safety stock.

b. The inventory holding cost is $50/unit/year. What is the annual cost of carrying the safety stock?

Please show step by step solution to this problem

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