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Please do fast Harvey sells a high-end espresso machine, an expensive and bulky item. For this reason, Harvey attaches a very high holding cost of

Please do fast

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Harvey sells a high-end espresso machine, an expensive and bulky item. For this reason, Harvey attaches a very high holding cost of $50 per year to each machine. Harvey sells about 400 of these yearly, and estimates the variance of yearly demand to be 100. Annual demand follows a normal distribution. Since customers are willing to wait for the machine when he is out of stock, the shortage penalty is low. He estimates the shortage penalty to be $25 per unit. Order lead time is three months. The fixed ordering cost is $150. Determine the following: a. The lot size and the reorder point, using the iteration approach. Start with Qo = EOQ. What are the values of Q, and R1 (round to the nearest integers)? Q1 [ Select ] R1 = 103 b. Safety stock = 3 c. Resulting Type I service level (enter answer to four decimal places) = [ Select ] d. Resulting Type 2 service level (enter answer to two decimal places) = 0.9561 e. What percentage of the average annual holding cost is incurred by holding safety stock? 24.45 %

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