Assignment 3 1 Understanding the EOQ Model Scenario 1: Suppose we are analyzing the weekly demand for a given product that averages EDI = 1,500 units with a standard deviation of op = 800 units. Each product costs $10, and incurs a bolding cost of 25% per year to carry inventory. The company has an opportunity to set up a warehouse in the local area to avoid the international shipping costs. Each order shipped from Europe currently incur a fixed transportation and delivery cost of $10,000. 1. Considering 52 weeks in a year, what is the approximate EOQ? (a) 21.980 units (b) 3.464 units (e) 78.994 mits 2. If the lead time is four weeks and the company wants to provide its customers a service level of 90%, approximately how much safety stock (20.50V) should it carry? (A) 1.025 units (b) 2.050 units (C) 4.100 units Scenario 2: Suppose we are assisting the matinger of an office supply store. Oue product in the store is computer paper. The manager istmes that 10,000 boxes will be sold this year at a constant rate throughout the year. There are 250 working days per year and the lead-time is three days. The cost of placing an order is 830, while the holding cost is $15 per box per year. 3. How many boxes (Q") should the manager order each time? (a) 200 boxes (b) 100 boxes (c) 500 boses (d) 100 bases 4. If the manager orders 500 boxes (instead of Q) cach time he orders from his supplier, what would his total annual inventory cost be? () $3,000 (6) $1,350 (c) $3.075 (d) $3,750