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The following information relate to Jaika Company limited, what are the EOQ and reorder point?
Annual Demand = 1,000 units
Days per year considered in average
Daily demand = 365
Cost to place an order = $ 10
Holding cost per unit per year = $ 2.50
Lead time = 7 days
Cost per unit = $15
Required
i) Advise the management on the economic quantities that the organization needs to purchase to minimize costs.
ii) Also advise on the reorder point.
iii) Explain to the management your advice.
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