) A battery company sells automotive batteries to car dealerships. The annual demand is approximately 1,200 batteries. The company pays $28 for each battery and estimates the annual holding cost is 30% of the batterys value. It costs approximately $20 to place an order. The supplier currently orders 100 batteries per month.

• What is the total inventory costs for the order quantity for the current policy?
• What is the economic order quantity?
• How many orders will be placed per year using EOQ?
• What is the ordering, holding and inventory costs for the EOQ?
• How much will the company save by moving to an EOQ policy?

Part B) Suppose the company determines that the annual demand for the batteries is N(1,200,50), and it takes 2 weeks to receive an order from the factory.

• What is the expected demand during the lead time?
• What is the standard deviation of the demand during the lead time?