Question: The order processing cost for an item is P100. Annual demand is 5,000 units. The item cost is P20; inventory holding cost is P2 per

The order processing cost for an item is P100.

The order processing cost for an item is P100. Annual demand is 5,000 units. The item cost is P20; inventory holding cost is P2 per item per year. The shortage cost is P15 per unit. The lead-time is 4 weeks. Weekly demands and independent. Average weekly demand is 200 units. The standard deviation of lead time demand is 82 units. Above data was entered into an inventory management program as follows: ------INFORMATION ENTERED---- PRODUCT DEMAND 5,000 ORDERING COSTS 100 HOLDING COSTS 2 DELIVERY LEAD TIME 4 DEMAND OVER LEAD TIME 800 STOCKOUTS PER PERIOD (N(Z) times STD Dev of Lead time Demand) =0.56 SHORTAGE COSTS 15 Required: Compute the following: 1. OPTIMAL ORDER QUANTITY 2. REORDER LEVEL 3. SAFETY STOCK 4. Annual ORDERING COSTS 5. Annual CARRYING COSTS-CYCLE STOCK 6. Annual CARRYING COSTS -SAFETY STOCK 7. Annual SHORTAGE COSTS 8. TOTAL INVENTORY COSTS

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