Determine the annual holding and order costs

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Review the inventory information information and formulate an inventory management system. The item is demanded 50 weeks a year. Item cost $ 10.00 Standard deviation of weekly demand 25 per week Order cost $ 250.00 Lead time 1 week Annual holding cost (%) 33 % of item cost Service probability 95 % Annual demand 25,750 Average demand 515 per week

A. State the order quantity and reorder point. (Use Excel's NORMSINV() function to find the z value. Do not round intermediate calculations. Round z value to 2 decimal places and final answer to the nearest whole number.)

B. Determine the annual holding and order costs. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

C. Assume a price break of $50 per order was offered for purchase quantities of 2,000 or more units per order. If you took advantage of this price break, how much would you save annually? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM132149355

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