Question: Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 12.00 Standard deviation of weekly

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


Item cost	$	12.00		Standard deviation of weekly demand	20	units
Order cost	$	250.00	/order	Lead time	1	week
Annual holding cost (%)		20	% of item cost	Service probability	90	%
Annual demand		22,700	units
Average demand		454	/week

a. Determine the order quantity and reorder point. (Use Excels NORMSINV( ) function to find your z-value and then round that z-value to 2 decimal places. Do not round any other intermediate calculations. Round your final answers to the nearest whole number.)

Optimal Order quantity:

Reorder points:

b. Determine the annual holding and order costs. (Do not round any intermediate calculations. Round your final answers to 2 decimal places.)

Holding Cost:

Ordering cost:

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