Response to the following problem:
Demand for Stick disposable razors at Buyright Drugs averages seven packages per day. The razors cost Buyright $0.80 per package and sell for $1.49. Buyright uses a 20 % annual holding cost rate and estimates the cost to place an order for additional razors at $25. Buyright is open 365 days a year and desires a safety stock of 15 packages. The lead time for delivery is five days. Determine the following:
a. The optimal inventory policy (order quantity and reorder point) for Stick razors.
b. The number of days between orders (cycle time).
c. The total annual inventory cost (holding, ordering, and procurement) and the projected annual net profit of this policy. What assumptions did you make regarding demand in solving this problem?