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Operations Management
Assignment: Inventory Control
I would like like the solution "step by step"
The manager of a construction firm has determined from historical records that demand for cement averages 5 tons per week with a standard deviation of 3 tons. The supply lead time is 4 weeks. The cost of a ton of cement is $100 and inventory carrying cost is estimated at an annual rate of 30%. The cost of placing an order is $96.[Assume 50 weeks in a year.]
Compute the following:
a. Economic order quantity b. Number of orders per year c. Cycle length (i.e., number of weeks between consecutive orders) d. Average inventory level e. Total annual cost of ordering + inventory carrying f. Compute the reorder pointand the corresponding safety stock for each of the following service levels:
i. 90% ii. 95% iii. 99% iv. 99.9% v. 99.99%
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