Berta’s Shoe Company is considering a change of their current inventory-control system for soccer shoes. The information regarding the shoes is given below.

The company decides to use a fixed-order-quantity system. Use the FQS Safety Stock Excel template in MindTap to find the economic order quantity and reorder point to provide a 95 percent service level.  Explain how the system will operate.

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Average demand = 250 pairs/week Lead time = three weeks Order cost = $75/order Unit cost = $21.50 Carrying charge rate = 0.20 Desired service level = 95 percent Standard deviation of weekly demand = 40 Number of weeks per year = 52