Indiana Electronics requires a 95% service level for its 686MX computer. Average delivery lead time for the item from the supplier is 4 days and average daily demand for the item is 5 units. This implies that: a. there is a 5% chance that demand will exceed supply during the lead time.
b. there is a 5% chance that safety stock will be used during the lead time.
c. 95% of all customer orders will be filled each year.
d. a quantity equal to 95% of demand during lead time should be on hand when a reorder is placed.
d. none of the above.

You are the manager of a large crude-oil refinery. as part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. the replacement and downtime cost in the first year is $165 comma 000. this cost is expected to increase due to inflation at a rate of 7% per year for six years (i. e. until the eoy 7), at which time this particular heat exchanger will no longer be needed. if the company's cost of capital is 15% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?