Given the following information, formulate an inventory management system The item is demanded 50 weeks a year Item Cost $10 00 Standard deviation of weekly demand 25 per week Order cost $250 00 Annual holding cost ( ) 33 of item cost Lead time 1 week Annual demand 25750 Service probability 95 Average demand 515 per week a State the order quantity and reorder point b Determine the annual holding and order costs c If a price break of $50 per order was offered for purchase quantities of over 2000, would you take advantage of it How much would you save annually

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Question: Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item Cost $10.00 Standard deviation of weekly demand

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

Item Cost	$10.00	Standard deviation of weekly demand	25 per week
Order cost	$250.00	-	-
Annual holding cost (%)	33% of item cost	Lead time	1 week
Annual demand	25750	Service probability	95%
Average demand	515 per week.	-	-

a. State the order quantity and reorder point.

b. Determine the annual holding and order costs.

c. If a price break of $50 per order was offered for purchase quantities of over 2000, would you take advantage of it? How much would you save annually?

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