Question: Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. PARAMETER VALUE PARAMETER VALUE Item cost $ 8.00

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

PARAMETER VALUE PARAMETER VALUE
Item cost $ 8.00 Standard deviation of weekly demand 20 per week
Order cost $ 223.00 Lead time 4 week
Annual holding cost 28 % of item cost Service probability 99 %
Annual demand 27,400
Average weekly demand 548 per week

a. Determine the order quantity and reorder point. (Use Excel's NORM.S.INV() function to find the z value. Round z value to 2 decimal places and final answer to the nearest whole number.)

b. Determine the annual holding and order costs. (Round intermediate calculations to 2 decimal places. Round your answers to 2 decimal places.)

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