Problem 1. Given the following information, formulate an inventory management system. The item is demanded 50…

Problem 1. Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. $ $ Item cost Order cost annual hold cost (%) Annual demand average demand Standard deviation of weekly demand lead time service probability Last Year 10.00 250.00 33% of item cost 25,750 515 per week 25 per week 1 week 95% a) state the order quality and re-order point. Annual demand = 25,750 3 $250.00 Annual holding cost ($) per units Ordering cost = EOQ (Economic Order quantity) = 2 DS 9 H Average demand = 515 Lead time = 1 1.64 From Standard normal distribution, z = Stand deviation durng lead time = Re-order Point = R=_L +:0, 25 b) determine the annual holding and order costs Annual demand = 25,750 EOQ = Ordering cost (S) = $250.00 Annual ordering Costs = D O S $3.30 Annual holding cost($) per unit = 9 Annual Holding Cost = _ 2 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 annualy? CH Annual holding cost = D Annual ordering cost = D Total annual cost = H is + O WI Total annual cost with discount = Saving =

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