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Joe's Book Store stocks the book The Goal by Eli Goldratt. The demand for the books is 50 per week, it costs $100 per shipment

Joe's Book Store stocks the book "The Goal" by Eli Goldratt. The demand for the books is 50 per week, it costs $100 per shipment for transportation costs, $25 for purchasing salaries and expenses, and it costs $26 per year to carry each book. The standard deviation of demand during the lead time is 75 units. Management allows one stock out per year. Lead time for the part is 2 weeks.

  1. Calculate EOQ
  2. How many orders need to be placed per year?
  3. What is the average inventory?
  4. What are the annual holding costs? **ignore safety stock in this calculation
  5. What are the annual ordering costs?
  6. Why are contemplating hiring a 3PL to handle transportation. They calculated they could reduce the transportation costs to $50 per shipment with a 10% management fee. How does that impact the total cost? Calculate the savings.
  7. What is the customer service level?
  8. How much safety stock should be carried?
  9. What is the order point?

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Overview To solve this problem we need to use the Economic Order Quantity EOQ formula and other related formulas First lets calculate the EOQ Given De... blur-text-image

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