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1. Ray's Satellite Emporium wishes to determine the best order size for its best-selling satellite dish. Ray has estimated the annual demand for this model at 1,000 units. His cost to carry one unit is $100 per year per unit, and he has estimated that each order costs $25 to place. Using the EOQ model, how many should Ray order? Please provide the formula, at least one step of calculation, and the correct order size.
2. Given the following information, formulate a continuous-review inventory management system. The item is demanded 50 weeks a year.
Item cost
$10
Standard deviation of weekly demand
Order cost
$250
25 per week
Annual holding cost (%)
33% of item cost
Lead time
1 week
Annual demand
25,750
Service probability
95%
Average demand
515 per week
Compute the order quantity and reorder point.
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