Problem:
Given the following information, formulate an inventory management system. The item is demanded 50 weeks a year.
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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
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a. State the order quantity and reorder point.