Question: High Tech Inc. is a virtual store that stocks a variety of calculators in its warehouse. Customer orders are placed; the orders are picked and

High Tech Inc. is a virtual store that stocks a variety of calculators in its warehouse. Customer orders are placed; the orders are picked and packaged; and then orders are shipped to the customers. A fixed-order-quantity inventory control system (FQS) helps monitor and control these SKUs. The following information is for one of the calculators that High Tech stocks, sells, and ships.

Average demand: 12.5 Lead time: 3 weeks Order cost: $ 20/order Unit cost: 0.25 Carrying charge rate: 0.25 Number of weeks: 52 weeks per year Standard deviation of weekly demand: 3.75 SKU service level: 95%

Current hand on inventory: 35 calculators

scheduled receipts: 20 calculators

Backorders: 2 calculators

a. What are the economic order quantity?

b. What are the total annual order and inventory- holding costs for the EOQ?

c. What is the reorder point without safety stock?

d. What is the reorder point with safety stock? e. Based on the previous information, should a fixed- order quantity be placed, and if so, for how many calculators?

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