Question: QUESTION 1 A local electrical company orders a special type of widget from an Asian supplier at a cost of $8.00 per widget. The company

QUESTION 1

A local electrical company orders a special type of widget from an Asian supplier at a cost of $8.00 per widget. The company has a daily demand of 100 widgets with a standard deviation of 25 widgets. Annual holding cost is $2.50 per widget and cost to place an order of $15. It takes 7 days to receive an order and the company operates 250 days for the year. The manager has set a 96% service level.

Determine the Economic Order Quantity (EOQ).
What is the standard deviation of demand during the lead time?
Determine the safety stock?
What is the reorder point?
What is the total annual cost at this order quantity?

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