Question: Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $10 Standard deviation of weekly demand

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.

Item cost

$10

Standard deviation of weekly demand

25 per week

Order cost

$250

Lead time

1 week

Annual holding cost (%)

33% of item cost

Service probability

95%

Annual demand

25750

Average demand

515 per week

a. State the order quantity and reorder point

Answer:

R = 556Q= 1975

Holding cost = $3,258.75

Ordering Cost = 3,259.49

***Need the formula....***

b. Determine the annual holding and order cost

Answer:

Holding Cost = $3,300.00

Ordering Cost = $3,218.75

The savings would $643.24

***Need the formula***

*** NEED THE FORMULA WRITTEN OUT AND BROKEN DOWN IN ORDER TO UNDERSTAND THE ANSWERS.

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