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A local supermarket sells a popular brand of shampee at a fairly steady rate of 3 8 0 b o t c g Per month.

A local supermarket sells a popular brand of shampee at a fairly steady rate of 380botcg Per month. The cost of each bottle to the supermarket is 45 cents, and the cost of placinh an order has been estimated at $8.5. Assume that holding costs are based on a 25 pereent annual interest rate. Stock-outs of the shampoe are not allowed.
a) Determine the optimal lot size the supermarket should order and the time between placements of onders for this product. [2]
b) If the lead time is three months, find the reorder point based on the on-hand inventory.
[1]
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