Question: A .Economic Order Quantity: ABC Inc. buys 4000 boxes per year. The annual holding cost per one unit per year is $50. Admin/paper/communication cost required

A .Economic Order Quantity: ABC Inc. buys 4000

A .Economic Order Quantity: ABC Inc. buys 4000 boxes per year. The annual holding cost per one unit per year is $50. Admin/paper/communication cost required to execute an order are $80/order. (15 marks) a. How many boxes (Q=?) should ABC order at a time? (2 mark) b. How many times per year should the company order? (1 mark) c. Calculate the demand of wood boxes per day (There are 250 working days/year)? (No marks) d. If the lead time for boxes from the supplier is 3 days, what is the re-order point? (2 mark) (2 marks) e. Calculate the Total Annual Cost (TAC) for Carrying Cost f. Calculate the TAC for Ordering Cost g. Calculate the TAC for both (Carrying and Ordering) Costs (2 marks) (1 mark) B. Uncertainty of Demand (5 marks) Based on the information in the following table, answer the following question: If you use a re-order point of 90 units, what is your probability for a stock-out? Demand during lead time 50 60 70 80 90 100 Probability 10% 20% 30% 20% 10% 10%

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