ZQ Fishing creates novelty singing fish that can be hung on household walls

ZQ Fishing creates novelty singing fish that can be hung on household walls

ZQ Fishing creates novelty singing fish that can be hung on household walls. Each singing fish costs $4 to make and distribute and sells for $15. The holding costs consist of a 25% yearly interest rate on item costs. The lead time for a production order is 2 weeks and it costs $150 to setup the machinery to create a batch of singing fish. The demand during the two week lead time is normally distributed with mean 25 and standard deviation 8. Backorders cost ZQ Fishing $20/unit/year.

1. What is a good value for the production order size (Q)?

2. what is a good value for the reorder point (r)?