Answer Happy

A supplier always avoids shortages with overtime
production. The company follows a base-stock policy, but the
operations manager must decide what base-stock level is
optimal. Demand is normally distributed with mean 8,000 and
standard deviation 600. The holding cost is only $0.05 per
period per unit but if there is a shortage – of even just one unit!
– the supplier must run overtime production with a fixed cost of
$200 and an extra cost per unit of $1. The product can be
produced in any quantity during regular or overtime
production. By simulating thousands of times, determine the
base-stock level (to the nearest 100) that minimizes the average
holding/overtime production cost per period.
a) What is the best
base-stock level (that minimizes the average cost)?
b) What is the
corresponding average cost per period for the best base-stock
level?
c) During what proportion of periods is
overtime production required (for the best base-stock level)?
Please show work with excel. Thanks.