Situation 8: Given the following information, formulate an inventory management system.
The item demanded is 50 weeks a year.
Item cost $12 Standard deviation of weekly
demand
Lead time
Service probability Order cost
$225.00
Annual holding cost
25%
(%)
Annual demand
$26,000
Week per year
State the order quantity and reorder point. 30/week a. 1 week
90%
50 b. Determine the annual holding and order costs.
c. If a price break of $60 per order was offered for purchase quantities of over 2,000, would you
take advantage of it? How much would you save annually?
Categories: