Question: 1. Steady Back Enterprise has following information: Average demand = 23 units per day Average lead time = 14 days Item unit cost = $50

1. Steady Back Enterprise has following information:

Average demand = 23 units per day

Average lead time = 14 days

Item unit cost = $50 for order less than 200 units

Item unit cost = $48 for order 200 units and more

Ordering cost = $28

Inventory carrying cost = 25%

Business days = 50 weeks

Safety stock = 9%

Standard deviation = 9 units

a) What is the optimal ordering for the Enterprise?

b) How many orders per year?

c) Reorder point with safety stock

2. A company experiences semi-annual demand of 650 units for an item that it purchases. The item costs $50 when purchased in quarantities less than 100 and $48 for 100 or more. Ordering costs are $40 and the carrying cost is 25 percent. How much should the company buy each tima an order is placed, and what is the total inventory costs for a year ?

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