Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.

Item cost Order cost Annual holding cost (%)

Annual demand Average demand

$10.00

$250.00 33% of item cost 25,750 515 per week Standard deviation of weekly demand Lead time Service probability 25 per week 1 week 95%

a. State the order quantity and reorder point.

b. Determine the annual holding and order costs.

c. If a price break of $50 per order was offered for purchase quantities of over 2,000, would you take advantage of it? How much would you save annually?