Optimal order size and minimum total annual inventory cost

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Reference no: EM131023151

A store stocks beer mugs and the demand for these beer mugs is 10,200 per year. It costs $120 per order of the mugs and it costs $1.35 per mug per year to keep the mugs in stock. Once an order is placed, it takes seven days to receive the order from the distributor. Determine the following:

a. Optimal order size

b. Minimum total annual inventory cost

c. Reorder point

Reference no: EM131023151

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