Company has been utilizing basic economic order model

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1. Daily demand for a product is 150 units, with a standard deviation of 20 units. If the inventory review period is 10 days and the lead time to fulfill an order is 5 days, how many units should be ordered if the company has 100 units in stock and is willing to accept a 0.5% chance of stocking out?

2. A company has been utilizing a Basic Economic Order (EOQ) model to optimize its inventory ordering policy of microwave ovens. If the holding cost is $20/unit per year and the Economic Order Quantity (EOQ) is 250 units. What is the total ordering cost for a year? The unit cost for a microwave oven is $300. Explain your answer.

Reference no: EM132176942

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