Annual demand, D= 722500*2.4/(2*50)= 17340

	periods per year, o		300
	Annual demand, D=		17340
	Order cost or setup cost, S		$50.0
	item cost		$12.00
	holding cost percent		20%
	holding cost per year, H=	holding cost percent*item cost	$2.40
	Lead time, LT		6.0
	Economic Order quantity, Q=		850
Answer b	Annual ordering cost=	D*S/Q	$1,020
Answer c.	Reorder point, ROP=	(D/o)*LT	346.80
Answer d	Time between orders=	periods per year/orders per year	14.71

6. (12 marks) A retail store purchases certain household equipment from a supplier and resells them for a profit. Based on past sales record, they can sell the equipment fairly evenly throughout the year. The store is open 300 days every year. The total cost to handle each purchase order is about $50, and the inventory cost for each unit is $2.4 yearly, which is 20% of the purchase cost. It takes about 6 working days for each order to be delivered to the store. (e) Produce a graph detailing the inventory change in time and reordering point. (f) Suppose it is known at the beginning of an inventory cycle that the delivery of the order will be delayed. Up to how many days the delay can be before shortage occurs? 6. (12 marks) A retail store purchases certain household equipment from a supplier and resells them for a profit. Based on past sales record, they can sell the equipment fairly evenly throughout the year. The store is open 300 days every year. The total cost to handle each purchase order is about $50, and the inventory cost for each unit is $2.4 yearly, which is 20% of the purchase cost. It takes about 6 working days for each order to be delivered to the store. (e) Produce a graph detailing the inventory change in time and reordering point. (f) Suppose it is known at the beginning of an inventory cycle that the delivery of the order will be delayed. Up to how many days the delay can be before shortage occurs