Question: Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. PARAMETER VALUE Item cost $ 9.00 Order cost

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

PARAMETER	VALUE
Item cost	$ 9.00
Order cost	$ 202.00	per order
Annual holding cost	28%	of item cost
Annual demand	24,000	units
Average weekly demand	480	per week
Standard deviation of weekly demand	20	units
Lead time	1	week
Service probability	90%

a. Determine the order quantity and reorder point.

Note: Use Excel's NORMSINV() function to find the correct critical value for the given -level. Do not round intermediate calculations. Round "z" value to 2 decimal places and final answer to the nearest whole number.

Optimal order quantity

units 

Reorder point

units

b. Determine the annual holding and order costs.

Note: Do not round any intermediate calculations. Round your final answers to 2 decimal places.

c. Assume a price break of $50 per order was offered for purchase quantities of 2,000 or more units per order. If you took advantage of this price break, how much would you save annually?

Note: Do not round any intermediate calculations (including number of setups per year). Round your final answer to 2 decimal places.

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