Determine the annual holding and order costs

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Reference no: EM13104519

Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 8.00 Standard deviation of weekly demand 20 per week Order cost $ 223.00 Lead time 4 weeks Annual holding cost (%) 28 % of item cost Service probability 99 % Annual demand 27,400 Average demand 548 per week

a. Determine the order quantity and reorder point. (Round your answers to the nearest whole number.)
Optimal order quantity units
Reorder point units
b. Determine the annual holding and order costs. (Round your answers to 2 decimal places.)
Holding cost $
Ordering cost $

c. If a order cost can be reduced by $55 per order by purchasing quantities of 2,600 or more, what will be the annual savings? (Round your answer to 2 decimal places.)
Annual savings $

Reference no: EM13104519

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