Question: The following table shows the data for three different input materials that are to be procured from a single supply source and used in a

The following table shows the data for three

The following table shows the data for three different input materials that are to be procured from a single supply source and used in a manufacturing facility: Item Number 1 2 3 Mean Usage Rate (Lbs./Month) 6,000 1,200 4,000 Std. Dev. of Monthly Usage 500 lbs. 300 lbs. 400 lbs. Unit Cost ($/lb.) $8.00 $10.00 $5.00 The manufacturer's inventory holding cost rate is $0.25/$/year and employs a 95% cycle service level policy for all purchased materials. It has been decided to order these items jointly via a periodic review policy with a common review interval of 2 months. The expected supply lead time would be 0.3 month, with a standard deviation of 0.1 month. The processing cost of each order, consisting of all three items, under this policy would be $50. In addition, for transporting these three materials to the production facility, a total fixed cost of $600/shipment will be incurred, including all handling and other related charges. (a) Determine the order-up-to level for each of these input materials. (b) Compute the total annual purchasing, ordering, shipping and holding cost for the three purchased items under this joint replenishment policy

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