[6-25] Ross Whites machine shop uses 2,500 brackets during the course of a year, and this usage is relatively constant throughout the year. These brackets are purchased from a supplier 100 miles away for $15 each, and the lead time is 2 days. The holding cost per bracket per year is $1.50 (or 10% of the unit cost) and the ordering cost per order is $18.75.

There are 250 working days per year.

(a) What is the EOQ?

(b) Given the EOQ, what is the average inventory? What is the annual inventory holding cost?

(c) In minimizing cost, how many orders would be made each year? What would be the annual ordering cost?

(d) Given the EOQ, what is the total annual inventory cost (including purchase cost)?

(e) What is the time between orders?

(f) What is the ROP?

[6-41] The Hardware Warehouse is evaluating the safety stock policy for all its items, as identified by the SKU code. For SKU M4389, the company always orders 80 units each time an order is placed. The daily demand is constant, at 5 units per day; the lead time is normally distributed, with a mean of 3 days and a standard deviation of 2. Holding cost is $3 per unit per year. A 95% service level is to be maintained.

(a) What is the standard deviation of demand during the lead time?

(b) How much safety stock should be carried, and what should be the reorder point?

(c) What is the total annual holding cost?