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The purchase lead time is approximately 1 5 days. For simplicity, suppose that there are only two types of Energizer batteries in the warehouse: Item

The purchase lead time is approximately 15 days. For simplicity, suppose that there are only two types of Energizer batteries in the warehouse: Item #0378422CA,6V Lantern battery with annual demand of 5,767 units and price of $3.85 each, and Item #0378539CA,6V Lantern battery with annual demand of 603 units and price of $7.54 each. a. Suppose that the fixed cost of a purchase order for one SKU is $3.50 and the variable cost of each additional line item (SKU) is $0.50. Also suppose that holding cost rate is 20 percent of unit cost per year. Determine the optimal order interval. B. The forecast demand for Item #0378422CA is 138 units per week for the next few weeks and the standard deviation of demand is estimated to be 37 units per week. Currently there are 555 units on hand in the warehouse and none are on order. The service level for this SKU is desired to be 98.5 percent. Calculate the Imax (order up to level) for this battery, and determine the quantity to order.

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