MOUNTAIN DEW Company uses an item for which it places 10 order per year. The cost of a stockout is $30, the carrying cost is $ 0.50 per year per unit, and the following probabilities of a stockout have been estimated for various levels of safety stock: Safety Stock(units) Probability of Stockout 0 40% 50 20% 100 10% 200 5% 1. A material is purchased for $3 per unit. Monthly usage is 1,500 units, the ordering cost is $50 per order and the annual carrying cost is 40% Required: (a) Compute the economic order quantity, (b) Determine the proper order size if the material can be purchased at a 5% discount in lots of 2,000 units. 2. LeBron James obtained the following costs and other data pertaining to one of its materials: Order quantity 3,500 units Normal use per day 500 units Maximum use per day 600 units Minimum use per day 100 units Lead time 5 days Required: Compute the following o 1. Safety stock (maximum) 2. o 3. 4. order point normal maximum inventory absolute maximum inventory