Question: A company produces item Y, and uses the basic EOQ model for managing its inventory. Lead time to obtain item Y is two weeks. Demand

A company produces item Y, and uses the basic EOQ

A company produces item Y, and uses the basic EOQ model for managing its inventory. Lead time to obtain item Y is two weeks. Demand is normally distributed with a mean of 500 units per week and a standard deviation of 40 units per week. The desired service level 99%. The ordering cost is $12, and carrying cost is 20% of the items cost, which is $10. Determine the annual setup cost and the annual carrying cost for product Y for the economic order quantity. (Assume 52 weeks of operation per year.)

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