Three products are ordered by a retailer from a single vendor. The product data are given below, and the following information has been gathered. The fixed cost to place an order is $15, but once an order is placed, an item can be added to the order for $2. The carrying charge is 22% and the delivery lead time is 2 weeks. Assume a 50-week year.

a. Use the algorithm of Section 10.4.2 to find the order frequencies for each product.

b. If the fill rate target is 99%, use the methods of Chapter 6 to find the order-up-to-level for each product, given the results in part a.

Annual Unit Standard Deviation Time Demand Cost of Monthly Demand EOQ Supply Product (Units) ($) (Units) (Units) (Weeks) P-96 1 1,000 $2.00 20 95 4.77 2 500 $25.00 22 19 1.91 3 5,000 $9.45 120 98 0.98