Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.

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Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.

Parameter Value Item cost $10.00 Parameter Value Order cost $250.00/order Annual holding cost 33% of item cost Annual demand 25,750 units Average weekly demand 515/week Standard deviation of weekly demand 25 units Lead time 1 week Service probability 95%

a. State the order quantity and reorder point.

b. Determine the annual holding and order costs.

c. If a price break of $50 per order was offered for purchase quantities of over 2,000, would you take advantage of it? How much would you save annually?1002W

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ISE Operations And Supply Chain Management

ISBN: 9781260575941

16th International Edition

Authors: F. Robert Jacobs, Richard B. Chase

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