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Question: A grocery store opens for 6 days a week for 50 weeks each year. Tomato is delivered directly with a charge of $30 for each delivery. The store sells an average of 5 boxes of tomato a day. for which it costs $50 each box. The carrying charge including loss from obsolescence, delivery and handling is 10 percent of a box a year.
a. What are the optimal batch quantity. the optimal cycle time, and the optimal total cost?
b. If the lead time is one week, what is the reorder level?
c. How much should the store order if the tomato has a shelf-life of four days? What is the variable cost with the order?
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