What is the total annual inventory cost of your policy

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Annual demand for an item is 40,000 units. The holding cost rate is 30% of the item cost. Ordering costs are $60/ order. Quantity discounts are available according to the schedule below:

Quantity          Price per Unit ($)

1-99                 90.00

100-299           85.00

300-399           80.00

400+                78.00

a. What is the optimal order quantity?

b. What is the total annual inventory cost of your policy?

c. Assume 52 five-day weeks per year. If the lead-time is 5 weeks, what should the reorder point be?

Reference no: EM13843062

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