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The following information is available for a firm: Demand = 300 units/week Standard deviation of weekly demand = 35 units Ordering costs = $80
The following information is available for a firm: Demand = 300 units/week Standard deviation of weekly demand = 35 units Ordering costs = $80 / order Holding costs = $2 / unit / year Service level = 99% (Z value = 2.33) Lead-time = 4 weeks Number of weeks per year = 52 1. How frequently (approximate time between orders in weeks) should orders be placed if EOQ strategy is used? (15%) 2. What is the safety stock this firm is supposed to carry? (10%) 3. Today you are reviewing the stock for this product and have the following info: On hand = 650 Scheduled Receipts = 590 Back orders = 25 Should you place an order? (15%)
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