A your firm uses a fixed order quantity system and operates

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A. Your firm uses a fixed order quantity system and operates 52 weeks per year. One of the items handled has the following characteristics

Annual Demand = 20,000 units
Order Cost = $ 40 per order
Holding Cost = $ 2 per unit per year
Lead time = 2 weeks
Demand is normally distributed with a standard deviation of weekly demand of 100 units.

a) Calculate the item's EOQ. What is the average time between orders (in weeks)
b) Find the safety stock and reorder point that provide a 95% customer service level

B. The University Bookstore at a prestigious private university buys mechanical pencils from a wholesaler. The wholesaler. The wholesaler offers discounts for large according to the following price schedule:
Order Quantity Price per Unit
0 - 200 $ 4.00
201 - 2,000 $ 3.50
2,001 or more $ 3.25

Reference no: EM13382157

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