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Question
Suppose the XYZ Company, which has an annual demand of 12,000 units per year, order cost of $25, and annual holding cost per unit of $0.50, decides to operate with a planned shortage inventory policy with the backorder cost estimated as $5 per unit per year.
a. Determine the EOQ.
b. Determine the maximum number of backorders.
c. Determine the maximum inventory level.
d. How many working days elapse between reorders?
e. Determine the total inventory cost per year.
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