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Healthy Thymes store carries a popular item called Green Magic. The annual demand for this is 900 units. The cost of placing an order
Healthy Thymes store carries a popular item called Green Magic. The annual demand for this is 900 units. The cost of placing an order is $12 while the holding cost per unit per year is 25% of the unit cost. The unit cost is $30, and the lead time for the shipment to arrive is 5 days. The store is open about 300 days a year. (a) What is the economic order quantity? (round answer to integer) (b) What is the annual cost of ordering and holding? (Give in nearest cent, e.g., 1234.56) (c) Suppose the daily demand is not constant. During the lead time of 5 days, the average daily demand is 3 units, and the standard deviation of daily demand is 2 units. This makes the lead-time standard deviation 4.47 units. To keep the service level at 95%, what is the appropriate reorder point? (answer should be an integer) Highlight your answers and clearly label them with (a), (b), (c).
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