Question: Part i) Last year, the annual demand for a certain piece of merchandise that is inventoried at a department store warehouse was 13525 units. The

Part i) Last year, the annual demand for a certain piece of merchandise that is inventoried at a department store warehouse was 13525 units. The annual demand is expected to increase 8 percent in the next year. One unit of the product costs 7.60, and the selling price is 18.65. The holding cost rate = 11%/yr. Cost to place an order for the merchandise is 55.

Determine: (a) the economic order quantity; and (b) the total inventory cost for this case.

Part ii) A starting batch of 3500 work units is processed through 5 sequential operations, each of which has a fraction defect rate of 5%.

(a) How many good parts are in the final batch?

(b) How many defects are in the final batch?

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