$6$

Given the following information, formulate an inventory management system. The item is

demanded $5()$ weeks a year.

Item cost

Order cost

Annual holding cost $($Z$)$

innual demand

Average demand

SIOOO

S$250.$oo

$33\%$ of item cost

$25,750$

$515$ per week

Standard deviation of

weekly demand

Lead time

Service probability

$25$ per week

week

$95\%$

a$.$ State the order quantity and reorder point.

b$.$ Determine the annual holding and order costs.

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 annually?