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It is your responsibility, as the new head of the automotive section of Nichols Department Store, to ensure that reorder quantities for the various items have been correctly established. You decide to test one item and choose Michelin tires, XW size 185 × 14 BSW. A perpetual inventory system has been used, so you examine this as well as other records and come up with the following data:
Because customers generally do not wait for tires but go elsewhere, you decide on a service probability of 95 percent. Assume the demand occurs 365 days per year.
Determine the order quantity. (Round your answer to the nearest whole number.)
Determine the reorder point. (Round your answer to the nearest whole number.)
Determine the economic order quantity, the reorder point, total annual cost using the EOQ, if cost per tire is $35.00, holding cost is 20% of tire cost per year, demand is 1000 per year ordering cost is $20.00.
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