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The average demand for a particular part is 31 units a day. The unit cost of the part is $20. It costs $50 to place an order, and the inventory carrying cost per unit per year is 20% of the unit cost. Assume 250 working days a year. How many orders should be placed per year in order to satisfy demand and minimize total inventory cost?

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The demand for a medical equipment is uncertain and follows a normal distribution. Its average daily demand is 26 units, with a daily standard deviation of 2 units. It costs $58 to place an order, and it takes 3 weeks to receive the order. The equipment requires a 95% service level, or a 95% probability of not-stocking-out. What would be the safety stock level to satisfy the required 95% service level? Note that z = normsinv(0.95) = 1.64.

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The average demand for a particular part is 25 units a day. It costs $39 to place an order, and the inventory carrying cost is $9 per unit per year. Assume 250 working days a year. The part requires a 95% of service level with a safety stock requirement of 20 units. What is the average inventory of the part at any given time?

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Ray wishes to determine the optimal order quantity for its best-selling bike in his bike store. Ray pays the supplier a wholesale price of $125 each for this bike. Ray has estimated the average daily demand for this bike is 47 units. The store opens 300 days a year. The cost to carry one bike in the store for a whole year is 5% of the unit bike cost. Ray has estimated that, on average, the order processing cost, i.e., ordering cost, with the bike supplier each time is $120, and it roughly takes 5 working days to receive the order from the supplier. Ray wishes to avoid the stock-out situation with a probability of 95%, and this requires Ray to carry a safety stock of 60 bikes in the store.

What is the re-order point inventory level that Ray needs to re-order and stock up the bike?

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A medical equipment has an average monthly demand is 108 units. Its unit cost is $244. It costs $384 to place an order, and the inventory carrying cost is $40 per unit per year. The equipment requires a 95% of service level with a safety stock requirement of 24 units. What is the equipment’s minimum annual total inventory cost?

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Ray wishes to determine the optimal order quantity for its best-selling bike in his bike store. Ray pays the supplier a wholesale price of $91 each for this bike. Ray has estimated the average daily demand for this bike is 31 units. The store opens 258 days a year. The cost to carry one bike in the store for a whole year is 9% of the unit bike cost. Ray has estimated that, on average, the order processing cost, i.e., ordering cost, with the bike supplier each time is $138, and it roughly takes 20 working days to receive the order from the supplier. Ray wishes to avoid the stock-out situation with a probability of 95%, and this requires Ray to carry a safety stock of 30 bikes in the store.

What is the optimal order quantity (EOQ value) that Ray should order each time from the bike supplier to minimize his long-run inventory cost?

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