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    EOQ, lead time demand information;safety stock;reorder point

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

    a. State the order quantity and reorder point.

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    Solution Preview

    See the attached file. Thanks

    R Demand rate avg. (units per unit time) 25750
    sR Demand rate std. dev. (units per unit time) 176.78 (converted to annual)
    LT Leadtime avg. (time units) 0.02 (in terms of year = 1/50)
    sLT Leadtime std. dev. (time units) 0
    K Unit ordering/prod. cost ($ per order) $250.00 ...

    Solution Summary

    This post shows how to calculate EOQ, lead time demand information, calculate the safety stock based on S.L. and reorder point