Question: Inventory Management System Information Unit item cost: $ 1 0 . 0 0 Order cost per order: $ 2 5 0 . 0 0 Annual

Inventory Management System Information

Unit item cost: $

10.00

Order cost per order: $

250.00

Annual holding cost per unit of item

(%)

33 %

of unit item cost

Annual demand:

25, 750

Standard deviation of weekly demand:

25

per week

Lead time:

1

week

Service rate

/

level:

95 %

Calculations

Based on the EOQ model, solve a

(

,

)

policy for this inventory management system. Show the following steps in your calculations.

Calculate the EOQ amount. Explain the parameter values you need to calculate the EOQ amount. Then show the formula and your calculations to obtain the EOQ amount.

Calculate the reorder point. Find the z

-

score based on the excel function NORM.S

.

INV, and include a copy of your screen that shows this calculation in excel. Then explain the parameters needed in calculating the reorder point. Finally show the formula and your calculations to obtain the reorder point.

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