Problem:
Given the following information, formulate a continuous-review inventory management system. The item is demanded 50 weeks a year.
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Item cost
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$10
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Standard deviation of weekly demand
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|
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Order cost
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$250
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25 per week
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Annual holding cost (%)
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33% of item cost
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Lead time
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1 week
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Annual demand
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25,750
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Service probability
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95%
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Average demand
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515 per week
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|
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Required:
Question 1) Compute the order quantity and reorder point. Please provide formulas and caluculations. Solve the problem and show all work.