1. You are a supply chain specialist for Save-a-mart, a retailer. Its average weekly demand for potatoes is 10,000 bags, with a standard deviation of 2,000 pounds. A bag contains 10 pounds of potatoes that you buy from a farmer at a cost of 20 cents per pound. Your inventory carrying cost that includes cost of capital, storage, spoilage, etc., is 1% per month. Your cost of replenishment including transportation, labor, etc. is $300 and your supplier delivers a truckload of 40,000 bags per delivery. Your supplier takes 8 days to deliver a truckload of potatoes after you place an order. Determine the following:

A. Your order-size (2)

B. Time between orders/replacements or cycle time. (3)

C. Safety stock and reorder point if you maintain a customer service level of 92 percent. (10)

D. Annual inventory holding cost including cost of safety stock (5)

E. Annual replenishment cost. (5)